A suitable development model for Viet Nam in the new era

At a time when the world is being profoundly reshaped by strategic competition, artificial intelligence, digital transformation, and the restructuring of global supply chains, even development models that were once regarded as exemplary are undergoing significant adjustments.

Free-market models are facing increasingly deep social divisions, welfare states are under pressure from ageing populations and slower growth, and many industrial economies in East Asia are being forced to restructure in response to technological and geopolitical challenges.

This reality demonstrates that the fundamental issue is not the choice of a particular model, but the ability to build an effective, transparent system of national governance that can harness the strength of the people and adapt to the major shifts of the age.

This requirement is becoming increasingly urgent as Viet Nam enters a new phase of development, aspiring to become a high-income developed nation in a world marked by volatility and intense competition.

Why is it impossible simply to copy a model from elsewhere?

For Viet Nam, copying any model in its original form is virtually impossible. The country possesses a number of distinctive characteristics: a nation that has endured prolonged wars, begun from a low economic base, has a large population, occupies a sensitive geopolitical position and remains in the process of transitioning from an agricultural economy to a modern industrial one. These conditions require a model capable of ensuring stability while maintaining a sufficiently rapid pace of development to avoid the risk of falling behind.

More importantly, the world is changing too rapidly for any existing model to be replicated in its entirety. The formulas for success in the twentieth century may no longer be suitable in the twenty-first. The era of artificial intelligence, big data, digital transformation, technological competition, and non-traditional security challenges is reshaping the very foundations of national power. Countries that continue to follow outdated development paths risk finding themselves left behind before becoming prosperous.

Therefore, the decisive factor lies not in the name of the model but in the quality of national governance. Countries may operate under similar market economies, yet some become technological powerhouses while others fall into prolonged crises.

Likewise, countries may maintain strong states, yet some achieve extraordinary development while others stagnate for decades. This demonstrates that the essence of development does not lie in theoretical slogans but in governance capacity, transparency, and the ability to mobilise the strength of the people.

A developmental state

Drawing on international experience as well as Viet Nam’s own circumstances, the most suitable model is a developmental state combined with a modern market economy and an orientation towards sustainable development.

In essence, this is not a new model. Numerous studies of East Asia’s rise have shown that successful countries neither embraced absolute free-market principles nor maintained rigid centrally planned economies. Instead, they chose a middle path: using market mechanisms to foster competition and innovation while preserving the strategic role of the state in guiding long-term development.

Post-war Japan provides a notable example. The government focused on directing industrial manufacturing, science and technology, and exports, while leaving business operations to enterprises.

The Republic of Korea advanced by prioritising education, heavy industry, and the development of internationally competitive conglomerates. Meanwhile, Singapore built its strength on an efficient, transparent administration with exceptional strategic planning capabilities.

The common feature of these models is that the state does not attempt to manage every aspect of economic activity, yet remains strong enough to maintain stability, formulate national strategies, invest in the future, and create a favourable environment for businesses to thrive. This is precisely what Viet Nam needs at the present stage.

Strength lies in governance capacity

Perhaps the greatest lesson of the modern world is that national strength is no longer determined primarily by natural resources or cheap labour. Many resource-rich countries have lagged behind, while nations with few natural resources have become global centres of technology and finance. Increasingly, the decisive factor is the quality of institutions and national governance.

A modern state must first and foremost ensure political stability and social trust. Without stability, it is impossible to attract long-term investment, develop advanced technologies or pursue enduring national strategies.

At the same time, the state must establish transparent and effective institutions while minimising the “ask-give” mechanism. When procedural costs become excessive or vested interests dominate national resources, the economy loses its capacity for innovation.

Most importantly, the state must be able to invest in the future, particularly in education, science and technology, strategic infrastructure, and human capital. These are areas that market forces alone are unlikely to address adequately without national-level direction.

Early successes suggest Viet Nam is on the right path

Looking back over nearly four decades of the Doi Moi reform, it is evident that Viet Nam has achieved significant successes by combining economic openness with the state’s regulatory and guiding role.

From a country once struggling with food shortages, Viet Nam has become one of the world’s leading agricultural exporters today. From a position of isolation and embargo, it has integrated deeply into global production networks and become a major investment destination for many foreign corporations.

Several new industries, including electronics, information technology, telecommunications, and smart-device manufacturing, have taken shape. Transport infrastructure, urban development, and digital transformation have also advanced rapidly in recent years.

Notably, the private sector is increasingly emerging as an important driver of growth, with many Vietnamese enterprises expanding into high-technology industries, manufacturing, digital services, and strategic infrastructure.

Amid intensifying global competition, Vietnam can no longer rely primarily on cheap labour, resource extraction, or extensive investment-led growth. The appropriate path for the next stage is to build a development model founded on modern institutions, a dynamic market economy, science and technology, and the nation’s internal strengths.

The state must be strong in strategies, legal frameworks, and governance capacity; however, it should not seek to administratively direct the economy. At the same time, the private sector must genuinely become the central driver of growth, innovation, and national productivity improvement.

The target of achieving double-digit GDP growth from 2026 onwards reflects a strong development aspiration, a spirit of innovation and a determination to propel Viet Nam into a new phase of advancement. It is an important strategic goal that can stimulate institutional reform, enhance competitiveness, and unlock social resources.

However, international experience shows that high and sustainable growth can only be maintained when it is built upon labour productivity, investment efficiency, the quality of human resources, scientific and technological capabilities, and sound national governance. Therefore, the key issue is not merely the pace of growth but also the ability to strengthen the internal foundations that enable the economy to utilise development resources effectively.

Under Viet Nam’s current conditions, maintaining a high growth rate while ensuring macroeconomic stability, improving growth quality, and strengthening economic resilience will be decisive for long-term development.

If these foundations can be built in a substantive and sustainable manner, Viet Nam can confidently enter a new stage of development — one characterised not only by faster growth, but also by greater efficiency, stronger self-reliance, and a higher standing within the global economic and political landscape of the 21st century.

Link to the original article