Vietnam's Path to Growth: Expert Outlines Three Engines for a Smart Economy

As artificial intelligence (AI), the green energy transition, and the restructuring of global value chains reshape the world economy, Vietnam needs to build a smart economic model powered by three main growth engines: next-generation industrialisation, smart urbanisation, and deeper integration into global value chains.

According to economist Nguyễn Bích Lâm, former Director General of the National Statistics Office, AI, data, and innovation will provide the essential momentum to drive this transformation.

The Three Pillars of a Smart Economy

Next-generation industrialisation is built on a foundation of advanced technologies, AI, automation, smart manufacturing, and innovation. Its objective is not merely to expand production capacity but, more critically, to elevate productivity and increase value-added across the economy.

Smart urbanisation aims to transform cities from simple population centres into dynamic hubs of innovation, high-quality services, the digital economy, and green growth.

Meanwhile, deeper participation in global value chains should help shift the economy beyond contract manufacturing towards higher-value activities such as research and development, design, logistics, branding, and technology services.

Lâm stresses that the key is to connect these three drivers coherently so that they reinforce one another. Industrialisation alone, without smart urbanisation and stronger domestic enterprises, will not deliver significant gains in productivity or national competitiveness.

A 'Purpose-Driven' Development Ecosystem

A new growth model also requires a supportive ecosystem. Vietnam needs to build what Lâm calls a ‘purpose-driven development ecosystem’ to provide the foundation for a transition to a smart economy.

A purpose-driven development ecosystem is one in which a country clearly defines its position in global value chains, identifies the technologies it wants to master, and determines the competitive advantages it aims to build. Institutions, policies, financing mechanisms, workforce training, and infrastructure are then designed to support those specific objectives.

“If a spontaneous ecosystem represents growth driven by inertia, a purpose-driven ecosystem represents growth guided by deliberate design,” Lâm states.

At its core, such an ecosystem aligns the key components of the economy—institutions, businesses, capital markets, human resources, science and technology, physical infrastructure, and digital infrastructure—so they interact and reinforce one another according to clearly defined priorities.

Unlike spontaneous systems, where resources are fragmented and often driven by short-term interests, a purpose-driven ecosystem is built around a long-term vision and coordinated action among the state, businesses, and the market. The state’s role is not to intervene directly in economic activity but to create the conditions for development through institutions, infrastructure, data governance, and an environment that encourages innovation.

Fostering Strategic Industrial Clusters

In a spontaneous ecosystem, businesses often focus on short-term investment and fragmented technologies, making it difficult to build strategic industrial clusters. As a result, resources are dispersed and investment efficiency remains low.

A purpose-driven ecosystem seeks to create integrated development clusters where policy, infrastructure, data, talent, technology firms, and innovation centres are connected within a unified framework. This strengthens linkages, improves investment efficiency, and creates the conditions needed for the economy’s three key growth engines to operate effectively.

The private sector should play a central role in absorbing, commercialising, and spreading new technologies. Vietnam therefore needs to foster strong technology companies, innovative enterprises, and firms capable of leading domestic supply chains.

Strategic Priorities for 2026–2035

To ensure the smart economy becomes a driver of sustainable growth, a comprehensive reform agenda is needed for the 2026–2035 period.

The most important pillar is an inclusive, transparent, and adaptive institutional framework. In the AI era, competitiveness increasingly depends on institutional quality, governance effectiveness, and policy responsiveness. This requires a shift from an administrative management mindset to a development-oriented approach, and from an 'ask-and-give' mechanism to a transparent and stable competitive environment that rewards innovation.

At the same time, Vietnam must invest in digital skills and lifelong learning. Countries will compete less on low labour costs and more on their capacity to learn, adapt, and develop high-quality human resources.

Strategic infrastructure is another priority. This includes digital infrastructure, data infrastructure, energy systems, and innovation infrastructure. Data will become a strategic national asset, making it essential to establish an integrated national data system that connects government agencies, businesses, and markets.

The transition to a smart economy must also be linked to renewable energy development and green growth. Countries with reliable, affordable, and clean energy will enjoy a significant advantage in attracting high-tech investment and expanding the digital economy.

Strengthening Domestic Capacity

Economic restructuring and stronger domestic capacity are essential not only for improving growth quality but also for building the foundations of a smart economy and enhancing its internal capabilities.

Vietnam needs to move beyond labour-intensive assembly and processing towards a model driven by advanced technology, the digital economy, green industries, and innovation. Without greater technological content, AI may only improve the efficiency of the current growth model rather than create new sources of growth.

Domestic firms must strengthen their technological and innovation capabilities and participate more deeply in global value chains. At the same time, stronger links between foreign-invested and local companies are needed to promote technology transfer, skills development, and domestic production ecosystems.

Resources should be allocated more efficiently through market mechanisms, while long-term capital for innovation, strategic forecasting capacity, and a human-centred AI governance framework should be strengthened.

The period from 2026 to 2035 will be critical for Vietnam's competitiveness. The goal is not simply to adopt AI, but to build a smart economy in which AI becomes a new productive force, supported by next-generation industrialisation, smart urbanisation, and deeper integration into global value chains.

If Vietnam can accelerate reforms, strengthen businesses, and foster innovation, it will be better positioned to achieve sustainable growth and move closer to its goal of becoming a high-income developed country by 2045.