Rajat Nag Managing Director General of the Asian Development Bank (ADB)has described the “middle income trap” as one of challenges forVietnam as it gains the middle income country status and at the sametime said he believes in its ability to avoid the trap.
“I thinkall middle income countries are susceptible to the middle income trap.Vietnam of course will not be an exception. But we believe thatVietnam wil get out of the middle income trap. It should take urgentmeasures right now,” he told VNA reporter on the sidelines of theongoing 44 th ADB annual meeting in Hanoi .
Vietnamhas recognised this problem and the government has adopted itssocio-economic development plan for the next decade since January thisyear, he said, adding that there are three challenges in adopting thisplan, namely reform of State-owned enterprises, improvement of thequality of human capacity and meeting infrastructure challenges.
Henoted the issue of inequality that Vietnam should continue to dealwith. According to the ADB official, it is not a major problem inVietnam but countries that could be caught into the middle income traphave a lot of inequality.
Vietnam could avoid the middleincome trap by reducing inequality, he affirmed, adding if that happens,“I am quite optimistic that Vietnam will be able to avoid themiddle income trap, but the country must work very hard” in order toachieve this.
He suggested Vietnam should implementthe socio-economic development plan, focusing on reducing inequality,strengthening good governance, including anti-corruption, and pursuinggreen growth.
“ Vietnam is already ahead of the game because Vietnam recognise itself that it faces these challenges,” he affirmed.
Accordingto ADB, countries stuck in middle income trap are unable to competewith low income economies in manufacturing or with advanced economies inhigh skill innovations. They enjoy short periods of growth followed bystagnation or even decline and are stuck at low growth rates. /.