A province with a gross regional domestic product (GRDP) of around $965 million would need to generate approximately $96.5 million in additional value added (VA) to achieve 10% growth.

But maintaining that rate over several consecutive years becomes increasingly demanding. By the fifth year, the province would need to generate roughly $141 million in new value during that year alone. By then, its economy would have grown by approximately 61% from its original size.

This calculation illustrates both the advantages and challenges facing smaller economies.

With a relatively low GRDP base, the same amount of newly generated value translates into a higher percentage growth rate. However, smaller provinces often have limited domestic markets, fewer large enterprises and fewer industries capable of delivering substantial increases in output.

For provinces far from major economic centers, geographical barriers, high transportation costs and difficulties developing large industrial parks can easily offset the mathematical advantage of starting from a smaller economic base.

Their capacity to generate new growth may simply be too limited.

Sustaining 10% growth is the real challenge

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The provincial administrative center of Cao Bang, a mountainous province in northern Vietnam. Photo: VietNamNet.

The additional value created in one year becomes part of the economic base used to calculate growth in the following year. Maintaining a 10% growth rate therefore requires the economy to generate a larger amount of new value each successive year.

Consider a factory that generates approximately $193 million in value added annually. It may represent a substantial share of a province's GRDP, but if its output remains unchanged the following year, it contributes virtually nothing to that year's economic growth.

This also explains why a new power project, mining operation or major manufacturing plant can produce an exceptional jump in provincial GRDP during its first year of operation, without necessarily generating a similar increase in subsequent years.

In a large province, several billion dollars in economic activity may be supported by major enterprises expanding their operations. A mountainous province with few leading businesses, however, must often assemble the same amount of additional value from multiple industries and numerous medium-sized projects.

International experience offers useful examples.

Botswana enjoyed years of rapid economic growth driven by diamond mining. As production eventually stabilized, diamonds continued to account for a substantial share of the economy, but their contribution to further growth diminished sharply, forcing the country to seek alternative drivers.

Mauritius, an island nation with a small domestic market, gradually expanded into export-oriented textiles, tourism, finance and other services.

Each time an established growth engine matured, the country developed new sources of growth, allowing businesses to serve markets far beyond the limits of its population and territory.

Both countries faced a similar challenge: continually developing new productive capacity and finding external markets for it.

An economy cannot depend on the arrival of a major new project every year to sustain high growth.

Investment must translate into locally generated value

Disbursing $38.6 million in investment does not automatically increase a province's GRDP by the same amount.

Part of that investment may be spent on machinery, equipment, steel and other production inputs manufactured elsewhere. Only the value actually generated within the province contributes to its GRDP.

Likewise, the approval or groundbreaking of a major project does not immediately translate into corresponding economic growth.

Investment capital must first be converted into production capacity. That capacity must then produce goods or services, and those products must ultimately find a market.

For provinces with limited resources, the amount of value added generated by each unit of investment is therefore just as important as the total investment volume.

A newly completed road, for example, produces lasting economic benefits when it reduces transportation costs, opens access to new markets and attracts further investment.

Achieving sustained 10% growth consequently requires a different approach to economic management.

Instead of treating "10% GRDP growth" as a standalone percentage target, provincial authorities need to translate it into a concrete amount of additional economic value.

They must determine how much new value is required, which industries can generate it, which enterprises and projects will contribute, and in which quarter those contributions are expected to materialize.

They must also distinguish between relatively reliable sources of growth and those carrying greater uncertainty.

Where a province lacks a single powerful economic engine, growth must come from several medium-sized and smaller drivers operating simultaneously.

Agriculture needs to generate more value per hectare of land. Manufacturing must move further into processing and higher-value production. Tourism should encourage visitors to stay longer and spend more, while trade and logistics should retain a greater share of economic value within the locality.

Where expanding the workforce is difficult, productivity must improve.

And where major investment projects are scarce, shortening the time between investment approval and the start of commercial production becomes particularly important.

When the warning light comes on

A warning light can be understood as the point when actual economic performance begins to diverge from the trajectory required to meet the growth target.

This might happen when quarterly growth falls below projections, a key industry misses its production target, or a project expected to make a substantial contribution is delayed.

Such signals indicate that existing measures may no longer be sufficient to achieve the target, while the time available for corrective action is narrowing.

At that stage, economic management must shift from simply monitoring growth rates to addressing the amount of growth still missing.

The first step is to work backward from the annual GRDP target and calculate precisely how much additional value the economy still needs to generate.

Authorities must then identify where the shortfall can realistically be made up.

Which products still have room to increase output? Which enterprises have unused production capacity? Which projects could begin operations earlier than planned? And what specific bottlenecks are restricting production?

Removing an administrative obstacle, securing an earlier electricity connection or opening access to a new market will only help meet the annual growth target if authorities can determine how much additional value the intervention will generate and when that value will appear.

At the same time, provinces must manage three categories of productive capacity.

Existing capacity needs to be used more effectively. Newly developed capacity must enter production early enough to contribute within the current year. And the capacity needed to support growth in the following year must already be under preparation.

The combined value expected from these sources should also exceed the minimum amount required to meet the target, providing a buffer against project delays, market fluctuations and natural disasters.

The question of where this year's 10% growth will come from must therefore always be accompanied by a second question: if the target is achieved this year, where will the even larger amount of new value required for another 10% increase next year come from?

Provinces capable of answering both questions with clearly identified industries, enterprises and projects will have something far more useful than an ambitious growth target.

They will have a measurable economic development program that can be monitored, evaluated and adjusted as conditions change.

An Hai