For over three decades, the issue of Vietnam's potential economic "lagging behind" has been a persistent concern. Yet, the gap remains, as highlighted in recent remarks by General Secretary To Lam at the National Assembly.

Expressing deep concern, To Lam warned of Vietnam's stagnating growth compared to the rapid pace of global development. "We cannot afford to fall behind developed countries," he emphasized.

Although Vietnam has achieved high growth rates, the risk of falling into the middle-income trap remains imminent, threatening the nation’s ability to close the gap with other developing countries.

Worrying reality

In 1990, Vietnam’s per capita GDP was $98, compared to the global average of $4,168—a gap of $4,070. By 2023, Vietnam’s GDP per capita had risen to $4,346, but the global average climbed to $13,138, widening the gap to $8,792.

While growth has helped reduce the gap relative to some nations, Vietnam remains far behind regional peers. Over the past 15 years, Vietnam’s per capita income rose by $1,600, compared to increases of $3,600 in Thailand, $6,500 in Malaysia, and $16,000 in South Korea.

In absolute terms, Vietnam’s GDP grew by $160 billion over this period, while Thailand added $270 billion, Malaysia $200 billion, Indonesia $700 billion, and South Korea $850 billion.

Vietnam’s economic growth has steadily slowed:

1991–2000: Average annual GDP growth of 7.56%.
2001–2010: 6.61%.
2011–2020: 6%.
2021–2023: Average of 5.2%.

To achieve the 7% annual growth target by 2025, the economy would need to grow nearly 9% in 2024 and 2025 - a rate deemed unattainable as growth drivers wane.

In contrast, countries like Japan, South Korea, and China once achieved double-digit growth for over a decade, enabling them to transition from middle- to high-income status.

Economist Tran Sy Chuong likens economic growth to an airplane takeoff: "A plane must accelerate rapidly within a short distance to lift off; otherwise, it risks falling into the 'hole' of the middle-income trap."

The World Bank defines the middle-income range as a gross national income (GNI) per capita between $4,466 and $13,845 for upper-middle-income countries, and above $14,000 for high-income countries. Vietnam’s GNI per capita in 2023 was $4,180, leaving a significant gap to overcome.

Kenichi Ohno, an eminent scholar from Japan’s GRIPS institute, warns of Vietnam’s middle-income trap symptoms, including: Slowing growth rates; Limited availability of skilled engineers, innovators, and scientists; Low labor productivity and total factor productivity (TFP); Heavy reliance on foreign direct investment (FDI).

“Development fueled by FDI, resource exploitation, and large-scale projects will eventually run its course,” Ohno cautioned, emphasizing that true development comes from the value created by a nation’s people and businesses.

Breaking free from the trap

Although Vietnam achieved lower-middle-income status in 2008, without bold policies, catching up with regional peers in per capita income will take decades.

The question persists: Why has Vietnam struggled to eliminate the "lagging behind" risk identified over 30 years ago? Can the nation transition to high-income status by 2045, as envisioned?

Ohno suggests two critical steps:

Visionary Leadership: Vietnam needs dynamic leaders with strong economic acumen, capable of directly steering strategic policies.

Competent Technocrats: Effective policy execution requires skilled, dedicated, and ethical technocrats who ensure implementation at all levels.

Vietnam’s leaders must look beyond its borders for inspiration, examining global success stories while recognizing domestic challenges.

To escape the middle-income trap and sustain growth, the nation must: Prioritize human capital development, focusing on education and innovation; Shift from FDI dependence to nurturing local businesses and industries; Enhance governance by reducing bureaucratic inefficiencies and fostering transparency.

As General Secretary To Lam remarked: “We must act decisively to align our policies and governance with the demands of modern development. Falling behind is not an option.”

Tu Giang