A Growth Recipe For The Next Decade

A Growth Recipe For The Next Decade By Assoc. Prof. Nguyen Sinh Cuc A bookstore in HCMC: A workable growth model for Vietnam should embrace better social welfare It is time to hammer out appropriate policies and institutions to restructure the economy, cultivate intensive growth, strengthen social security and protect the environment Over the past 10 years, the flaws of Vietnam’s extensive growth model have been increasingly evident. The economy has expanded considerably, but such development is far from consistent and sustainable. Worse still, growth quality is dismal, with the competitiveness of most sectors falling short of sustainability benchmarks.In 2006-2010, Vietnam’s economy was led mainly by investment, which accounted for over 42% of the country’s gross domestic product (GDP) and suffered from increasingly appalling efficiency. The incremental capital output ratios for 2007, 2008, 2009 and 2010 were 5.2%, 6.6%, 8.0% and more than 8.4%, respectively. The main culprits were foot-dragging projects, especially in the fields of power supply and transport infrastructure. Investment was scattered and inefficacious, not least in the case of Vinashin. Another testament to Vietnam’s woeful growth quality during this period was the slow pace of economic restructuring, as well as the economy’s limited competitiveness. Also worrisome was the consumer price index (CPI), which hit 12.6%, 19.8%, 6.5% and 11.7% in 2007, 2008, 2009 and 2010, respectively. The figure for 2011 is estimated to jump by 18% year-on-year, adversely affecting the worth of the local currency. Besides, such statistics indicate Vietnam has encountered the most formidable inflation rate…