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In the framework of Vietnam Reform Development Forum (VRDF) 2019, international experts shared experiences from other countries which overcame the middle-income trap successfully, particularly drawing on the wellspring of South Korea's IT revolution and economic restructuring.
Sungchul Chung, a professor from the University of Science and Technology (UST) of South Korea, said that in the early 1960s, South Korea was one of the poorest economies in the world, with a per capita GNP of $82, relying on the agricultural sector for more than 60 per cent of its employment.
South Korea's development has been a process of learning, he recalled, by adopting and mastering foreign technologies for industrial development to then set up indigenous research and development capabilities to catch up, and then engaging in structural transformation (or creative imitation) and creative R&D to join the ranks of advanced economies.
"In the beginning, as the private sector lacked technological capabilities, the government stepped in directly to push industrial technology development," said Sungchul Chung.
In the 1990s, South Korea was nearing the end of its high-growth phase and exhausted the late-comer's advantages in growth, which is rather similar to the situation of present-day Vietnam. Competition in international markets was increasing and new competitors emerged in the low-mid-tech markets. Thereby, this country embarked on the economic restructuring to base itself on high technology.
In order to develop innovation and technology in Vietnam, Thach Le Anh, founder and director of Vietnam Silicon Valley (VSV) recommended at the VRDF to increase total factor productivity (TFP). One of the fastest ways to do this would be to promote technology commercialisation by creating a venture capital industry in Vietnam for tech startups.
She also proposed the government to draft and adopt the Law on Venture Capital and Pilot Investment in Domestic Venture Capital Funds to call for co-investment from overseas into Vietnamese tech startups, as well as leverage the technology levels of domestic businesses.
"If Vietnam wants to focus on developing startups to leverage the economy, the government needs to make direct investments to stimulate growth in the quantity and quality of startups, especially in the early stage," Anh said.
"Additionally, the government needs to play a role in attracting the private sector to invest in the startup market. This would encourage startups and private investors not only in Vietnam but also in the region and the rest of the world," she said.