Developing a knowledge-based economy is essential

A knowledge-based economy is the driver of productivity and economic growth that represents an intellectual socialist civilization.

Orientations

The political report at the 11th National Party Congress underlined the importance of developing a knowledge-based economy on par with global standards, considering it as one of the important orientations for new development strategies through 2020.

Since the 9th National Party Congress in 2001, the Communist Party of Vietnam (CPV) has highlighted the necessity of gradually developing the workforce to boost the country's knowledge-based economy.

At the 2006 10th National Party Congress, the CPV also stressed the need to accelerate national industrialization and modernization and develop a knowledge-based economy.

The CPV has defined developing a knowledge-based economy as a top priority of the eight fundamental orientations for the country in its transition to socialism, aiming to upgrade science and technology to carry out key tasks in the doi moi (renewal) process during the CPV’s next five-year term.

This is seen as a breakthrough in shortening the process of industrialization and modernization, as well as an important factor to ensure the balanced, steady and sustainable development of the national economy in the future.

This creative guideline is based on solid theory and practical reality, and provides motivation for boosting socio-economic development and ensuring national security and defense.

Devising a national strategy for developing a knowledge-based economy

To realize the Party Congress resolution, focus should be on the following key solutions:

First, a national strategy to develop a knowledge-based economy to promote socio-economic development should be created. All available resources should be used to develop tertiary education and vocational training to develop high-quality human resources, targeting capable leaders, managers, leading scientists, businesspeople and other highly skilled workers. Workers and farmers must be also educated and provided with essential equipment and materials to apply modern scientific methods in priority areas.

Second, Vietnam needs to explore new resources for education, information and knowledge, and take advantage of the intellectual resources of people at home and overseas Vietnamese. There should be an overall strategy for human development in the process of national industrialization and modernization.

According to the World Bank Institute (WBI), a nation aiming to develop a knowledge-based economy needs four things: (1) a highly-skilled workforce; (2) an effective, creative educational system; (3) modern information infrastructure, and (4) updated economic institutions.

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A knowledge-based economy is regarded as essential in the 21st century, especially since many countries are faced with the global economic crisis stemming from the US, the rapid depletion of natural resources, a seriously polluted environment and the “retaliation” of nature against humans that have destroyed the natural environment.

Vietnam still has to go a long way to catch up to advanced countries in the region like Japan, with a knowledge-based economy.

According to comparative statistics for three economic sectors in Vietnam and Japan, (1) agriculture, forestry and fisheries; (2) industry (processing and mining); (3) trade and services (finances and credit), there is a big difference in their contributions to the GDP of each country. The agricultural sector in Vietnam contributes 20.34 percent to the national GDP, while in Japan it contributes less than one percent. For the industrial and mining sector, Vietnam’s figure is 41.48 percent (mining and processing accounts for 31.03 percent, equivalent to one third of the national GDP) while in Japan it accounts for just 28.9 percent. The last sector contributes 38.18 percent to Vietnam's GDP compared to 70.8 percent, or two thirds, to the Japanese GDP.

It is worth noting that Vietnam’s financial and credit sector contributes 1.8 percent to the country's GDP while Japan contributes 30.9 percent, accounting for one thirds of its national GDP.

These figures show that Vietnam’s GDP primarily relies on contributions from simple production sectors while that of sectors requiring a high level of knowledge and technology remains low. Meanwhile, Japan’s main contributions to its GDP come from knowledge-based industries. This poses a huge challenge to Vietnam.

Third, it is important to develop science and technology with the support from businesses to create equal and healthy market competition. To sharpen its competitive edge in the era of globalization and knowledge-based economies Vietnam needs to invest more in developing high-quality human resources, restructuring its economy and accelerating administrative reforms.

Competition in a knowledge-based economy is tough in the fields of education, training, science and technology. For this reason, the State needs to create an environment so legal persons involved in scientific and technological markets can compete on an equal footing.

The State also needs to adopt open policies to attract transnational technological groups and countries with advanced science and technology to help Vietnam create research and development centres to bring knowledge and high technology into all aspects of the economy.

Fourth, investment should be focused on key technological sectors such as information, software, and digital technologies, as well as new energy, materials and bio-technology.

Priority should be given to developing hi-tech zones and software technology parks, making them the models for science and technology in the country.