More Research and Innovation Needed to Propel Vietnam’s Sustained Economic Growth

May 19, 2014

Victoria Kwakwa, World Bank Country Director for Vietnam

I learnt from a recent visit to the Institute of Biotechnology in Hanoi that bacteria living in the guts of termites may hold the clue to turning cellulose into an energy source – sustainable, green technology that can be harnessed for further poverty reduction in Vietnam. This is amazing.  

The ongoing Innovation Week in Vietnam showcases the country’s impressive progress in innovation.  Based on the INSEAD business school’s Innovation Efficacy Index, Vietnam is effective in accessing world knowledge and integrating in global value chains that create a potential for productive knowledge flows. Internet penetration, for example, has risen substantially since 2003, to 39.5 per 100 inhabitants in 2011.  That is much higher than Thailand (26.5) and Indonesia (15.4), which have significantly higher per capita incomes than Vietnam.

In science, Vietnam’s main advantages are in earth and environmental sciences and biomedical research, which also have above-average global impact based on the number of citations received per scientific publication. On the other hand, Vietnam has below-average specialization in disciplines such as clinical medicine and general science and technology, as well as the “built environment and design” industries, including civil engineering, construction, environmental impact, and urban design.

Despite the encouraging trends and outstanding world-class research being carried out in some institutes, the application of new technologies remains quite low in Vietnam. The same INSEAD Innovation Efficacy Index mentioned above also shows that Vietnam needs to strengthen its capability to mobilize and apply new knowledge for social and commercial purposes. Unless the country intensifies investment in deepening and disseminating activities, the value-added gains for innovation from science and technology achievements is likely to remain modest.

Weak linkages between science and industry are a key problem for society to address. Business expenditures in research and development account for only 2.8 percent of the funding of public research and play a modest role in the overall science and technology effort of Vietnam. A 2012 survey on skills in the labor force by the Central Institute for Economic Management and World Bank found that only about 6 percent of firms had engaged in innovation-related cooperation with an outside partner, and only about 1 percent collaborated with research institutes and universities.

Thus, three urgent actions are required to bring about greater innovation and they involve all of Vietnamese society. First of all, universities in Vietnam need to conduct more research related to the demands and challenges faced by society, especially considering that young people working at universities are the driving force for innovation. Reforming university financing to provide greater autonomy to attract research funding and scientists is an urgent policy reform priority to make this happen.   

Second, companies in both the public and private sectors need to take advantage of investments in research and development, which offer a solid path to greater profitability and sustainability. Finally, the Government of Vietnam, in addition to funding basic research, needs to  put in place policies and financing mechanisms that will boost the collaboration between universities, government research institutes and industry.

My visit to the IBT showed clearly that Vietnamese researchers have great potential.  This will need to be complemented by action from other stakeholders so that the microbes can provide a new source of energy to serve Vietnam’s developmental needs. Innovation has to be the business of the entire Vietnamese society.