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Vietnam should make a strategic shift towards a more productivity and innovation-based economy while making the most of the ongoing demographic dividend to sustain high quality growth over the next decade. This is among the main recommendations from the joint report between the World Bank and the Vietnam Academy of

Social Sciences on the new economic model to help Vietnam achieve high-quality growth for the 2021-30 period.

The report, which is being prepared with support from the Australian Government, proposes the Vietnam’s new economic model in 2021-2030 to center around three breakthroughs: innovation and entrepreneurship, human capital, and modern institutions.

“This report will help begin an exciting new chapter in Vietnam’s economic growth story,” said His Excellency Craig Chittick, Australian Ambassador to Vietnam. “A chapter that embraces innovation, promotes bold reform, and helps Vietnam achieve its ambitious development goals.”

To avoid the middle-income traps, experts contend that Vietnam will have to maintain a growth rate in the range of 7 to 7.5% for the 2021-30 period, higher than the average rate of 6.3% of the last ten years.

 “We are living in the era of disruptive technologies that presents both challenges as well as opportunities – I would like to call it ‘Doi Moi 4.0’,” said Ousmane Dione, Country Director for The World Bank in Vietnam. “To mitigate these risks and seize the opportunities Vietnam needs to accelerate reforms that boost productivity and innovation as key drivers of growth in the coming decade including steps to remove bottlenecks for private sector investment, enhance public sector institutions and invest in 21st century skills of the workforce.”

The report finds that the labor-intensive, export-led growth model Vietnam pursued during 2011 – 2020 has increasingly become obsolete against the context of Industrial Revolution 4.0, maturing global value chains, premature deindustrialization, and rising role of services.