Speaking at the national academic conference “Reforming Vietnam’s development model for a new era” on August 20, Prof. Dr. Ngo Thang Loi, a senior lecturer at the National Economics University, said Vietnam is among the countries with high growth rates.

Vietnam’s GDP has grown by an average of around 6.4 percent a year, twice the global average and significantly higher than growth rates in many regional economies.

Looking back at the country’s development, Loi said Vietnam had achieved significant results that created a foundation for a new phase of development.

In 1990, Vietnam’s GDP stood at $6.7 billion, ranking 85th globally. About 35 years later, GDP had surpassed $500 billion, lifting Vietnam to 35th place worldwide, with the economy growing more than 70-fold.

In 1990, Thailand’s GDP was $85 billion, ranking 35th globally. After 35 years, Thailand’s GDP was only about 12 percent higher than Vietnam’s, while its global ranking had risen by just five places.

Vietnam’s per capita income has also improved sharply. In 1990, it stood at $99 a year, ranking 122nd among 130 countries surveyed. In 2009, Vietnam officially graduated from the low-income group and entered the lower-middle-income group.

By 2026, Vietnam had been classified as an upper-middle-income country. Thailand took 23 years to make the same transition, while the Philippines and Indonesia needed around 30-31 years to reach that end.

According to Prof. Dr. Nguyen Trong Hoai, a senior lecturer at the University of Economics HCMC, after 40 years of Doi Moi (renovation) since 1986, Vietnam has moved from a low starting point to become an upper-middle-income country. However, to become a high-income country by 2045, Vietnam must overcome numerous challenges, particularly as its current growth model is approaching its limits.

One of the biggest bottlenecks is productivity. Data show that Vietnam’s total factor productivity (TFP) growth remains low compared with developing countries and emerging economies. Growth in information technology capital and labor quality is also limited.

To catch up with emerging economies, Vietnam’s labor-quality growth would need to be four times higher, while investment in information technology capital would need to increase fivefold from current levels.

The scope for productivity gains from structural transformation is also narrowing. Moving workers from agriculture into manufacturing and from rural to urban areas no longer provides as strong a growth boost as before. This requires a development model that relies more heavily on labor quality, technology and innovation.

Exports have grown strongly, but domestic value added remains low. Another bottleneck is the weak linkage between the FDI sector and domestic businesses. Technology-intensive exports have increased rapidly, but mostly come from the FDI sector, while the share of value added in total exports generated by domestic enterprises has declined. This indicates that the spillover effects and technology transfers from FDI remain below their potential.

Vietnam must turn FDI and technology into domestic capabilities

According to a research team of the University of Economics HCMC, Vietnam will find it difficult to achieve high-income status if it continues with its old growth model. By contrast, if it undertakes strong reforms and focuses on the right bottlenecks, Vietnam could become a high-income country around 2045-2047.

Under a reform scenario, TFP growth would need to rise from around 0.2 percent to an average of 2 percent a year. Reform efforts should focus on investment in technology and innovation. It is necessary to develop high-quality human resources and strengthen the capabilities of domestic businesses.

In terms of policy, Prof. Dr. Nguyen Trong Hoai said the core task is to shift from a 1i model based purely on Investment to a 3i model encompassing Investment, Infusion of technology and Innovation.

The three key pillars are strengthening domestic business capabilities, promoting technology spillovers from foreign companies and helping Vietnamese businesses move into higher-value segments of global value chains.

Meanwhile, Prof. Dr. Su Dinh Thanh, former president of the University of Economics HCMC, presented research on the conditions required to achieve double-digit economic growth, based on data from 165 countries over more than half a century.

The study identified four key factors: the investment rate, the share of high-value manufacturing fields, the scale of government spending and the ability to control inflation.

Vietnam has a high degree of trade openness and attracts substantial FDI, but its ability to convert these resources into domestic value within the manufacturing sector remains limited.

Nguyen Le