WB: Effective policy implementation is crucial for Viet Nam to reach high-income status by 2045
VGP - Viet Nam will need to shift its economic growth model and sharply improve the government’s capacity to coordinate and implement economic policy reforms and public investments to realize its aspiration for reaching high income status by 2045, a World Bank (WB) Group report says.
World Bank (WB) Country Director for Viet Nam Carolyn Turk
In its Systematic Country Diagnostic Update themed "How will Viet Nam blossom? Reforming institutions for effective implementation", the WB emphasizes that Viet Nam's traditional growth model faces major challenges from the COVID-19 pandemic, slowing globalization, and the country's increasing vulnerability to external shocks, especially climate risks.
After identifying a series of policy responses and reform priorities, many of which are not new, the report argues that adapting institutions will be the key to success.
Viet Nam's GDP per capita has increased fivefold over the past three decades, while its institutions have not adapted at the same speed since the Doi Moi of the late 1980s, said WB Country Director for Viet Nam Carolyn Turk, adding that a series of institutional reforms can help the country avoid the middle-income trap by increasing its efficiency to respond to new and complex global and domestic challenges.
Viet Nam has implemented its development priorities unevenly over the past 35 years. It has exceeded expectations in trade openness and social inclusion but lagged considerably in promoting green growth and upgrading national core infrastructure.
Such variability is explained by its institutions that have not been always well prepared to address increasingly complex, often cross-cutting development priorities, or to facilitate the transition to a higher-income society.
Five institutional reforms
Improving Viet Nam's implementation performance will require five institutional reforms, the report says.
Viet Nam will need to create a solid institutional anchor that will transform development priorities into concrete actions and streamline administrative processes to increase the effectiveness of government at all levels.
In addition, the nation should use market-based instruments to motivate public and private stakeholders; enforce rules and regulations to enhance motivation, trust, and fairness; and engage in participatory processes to secure greater transparency and accountability.
Thanks to these series of five institutional reforms, Viet Nam already transformed itself from one of the most closed economies in the world to one of the most open economies during the 1990s and 2000s.But the road from lower middle income to high income will be far more challenging.
By adopting these institutional reforms more systematically, Viet Nam will underpin its vision for economic development, strengthen its capacity to implement national strategies, and boost its motivation to produce results in several key areas – green growth, digital transformation, financial inclusion, social protection and infrastructure upgrading – that will help it achieve its development goals.
