Shifting Vietnam’s growth model ultimately means changing the national development mindset – where the state creates an enabling environment for innovation, businesses are unshackled, and individuals can fully realize their potential.

Since the 2008–2009 economic crisis, the government has repeatedly launched economic restructuring programs to revive the discussion on transforming the growth model.

In 2021, the National Assembly passed Resolution 31/2021/QH15, formally setting ambitious goals: to restructure the economy alongside an upgraded growth model that ensures macroeconomic stability, and enhances productivity, quality, efficiency, and competitiveness based on science, technology, innovation, and high-quality human resources.

Under this resolution, labor productivity is required to grow by more than 6.5% annually, total factor productivity (TFP) must contribute 45% to GDP, the number of enterprises should reach 1.5 million, and the digital economy should account for 20% of GDP by 2025.

These targets reflect Vietnam’s aspiration to move into the upper-middle-income group.

However, the gap between policy and reality remains wide.

According to the Government’s report delivered by Deputy Prime Minister Ho Duc Phoc to the National Assembly on October 20, only 10 out of the 27 indicators set in the resolution are likely to be achieved, 9 are difficult to meet, and 4 are projected to fall short.

The government frankly acknowledged: “The economic structure and growth model have not shifted significantly; the private sector’s development remains limited; and labor productivity does not yet meet the requirements of the new phase.”

The National Assembly’s Economic and Financial Committee, via an appraisal report by Chairman Phan Van Mai, also pointed out that the growth model remains slow to transition, still reliant primarily on capital and labor.

Meanwhile, sustainable drivers such as innovation, science and technology, and the knowledge economy have yet to make significant contributions.

This reliance is hindering Vietnam from transitioning to deep growth, increasing the risk of becoming trapped in middle-income status.

Old engines

Looking back over the past decades, the report summarizing 40 years of Doi Moi (Renovation) prepared for the 14th Party Congress acknowledges a major shift in awareness: Vietnam now understands it must transition from extensive to intensive growth, relying on science, technology, innovation, and aligning with the green economy, circular economy, digital technologies, and artificial intelligence.

However, the same report admits: “Industrialization and modernization tied to the transformation of the growth model and economic restructuring have not achieved their intended goals.”

Vietnam failed to become a modern industrial country by 2020.

Growth rates are declining in ten-year cycles.

Productivity, efficiency, and competitiveness remain low.

The three strategic breakthroughs - institutions, infrastructure, and human resources - have yet to meet expectations.

These figures are not just technical evaluations but institutional warnings: Vietnam is still growing based on outdated engines while the global economy has moved to models based on data, clean energy, and innovation.

The draft political report for the 14th Party Congress emphasizes further: “Development institutions remain incomplete; overlapping laws and policies persist; productivity, quality, efficiency, and competitiveness are low; ICOR (incremental capital-output ratio) remains high at 6.9; the transition to a new growth model linked with restructuring remains slow; and science, technology, and innovation have not become main drivers.”

A fast-moving economy cannot break through with weak engines, expensive fuel, and outdated technology.

New drivers

According to the draft political report for the 14th Congress, Vietnam will “establish a new growth model, restructure the economy, accelerate industrialization and modernization, and rely on science, technology, innovation, and digital transformation as the core drivers.”

The aim is to improve productivity, quality, efficiency, and the added value of the economy.

This will create new productive capacity, focusing on the data economy, digital economy, green economy, new energy, and new materials, while forming new growth poles and next-generation special economic zones on par with the region.

However, achieving double-digit growth as targeted will be a formidable challenge, particularly in terms of capital.

According to calculations from the Ministry of Finance shared during a forum organized by the Central Economic Commission, to increase GDP growth by 2.5–4 percentage points compared to current levels (without a productivity breakthrough), total investment must rise from 32.1% to 41.5% of GDP by 2030.

This equates to about $1.774 trillion between 2025 and 2030, or $262–296 billion per year.

This includes:

Public investment: $457–528 billion
Foreign direct investment: $239–271 billion
Domestic private investment: $876–975 billion

If public investment only reaches 75% of the required level, GDP growth may fall by 1.63–3.9 percentage points, with the sharpest declines in industry (-4.1 points) and construction (-8.9 points).

The report warns that high levels of public investment could create fiscal pressure.

External borrowing may be constrained by global trade tensions.

Government bonds could crowd out private capital.

Raising regular taxes could suppress consumption.

Relying on one-off revenues from land, infrastructure, and real estate could destabilize markets.

In short, capital-based growth is becoming increasingly expensive and unsustainable.

Only growth driven by knowledge and institutional reform can lift Vietnam out of the low-productivity trap.

A new approach to reform

From Resolution 31/2021/QH15 to the 40-year Doi Moi review, and now to the draft political report for the 14th Party Congress, one consistent theme emerges: the need to reform the growth model.

But without a change in institutional operations, new growth drivers will struggle to emerge.

To reform the growth model, resource allocation must change.

The state cannot be both referee and player.

Science, technology, and innovation must be treated as strategic budget investments - not mere campaigns.

Land use and capital markets must be reformed to empower the private sector, which remains the most crucial engine of growth.

Most importantly, decentralization must be real and come with clear accountability, allowing dynamic localities to become true growth poles rather than rhetorical slogans.

We cannot accelerate with worn-out engines, nor industrialize by mobilizing gold or extending retirement ages.

A breakthrough economy must rely not on idle citizen savings or longer work years, but on intellectual and institutional resources - these are the only levers that can deliver new productivity and real value.

If knowledge, science, technology, and innovation do not become the foundation, double-digit growth may occur for a few years, but cannot be sustained long-term.

Ultimately, transforming the growth model is not about changing GDP targets.

It is about reshaping the development mindset - where the state fosters innovation, enterprises are unshackled, and the public’s true potential is unleashed.

Tu Giang