Vietnam' Economic Complexity Index in comparison with its structural peers and its regional and aspirational set of countries (Source: Vietnam: Science, Technology and Innovation Report 2020) The country'sinnovation capacity, in comparison with its structural peers and its regionaland aspirational set of countries, leaves much room for improvement.
According tothe Global Competitiveness Index 2017-2018, Vietnam ranks 55th out of 137countries, behind Singapore (3rd), Malaysia (23rd), China (27th), and Indonesia(36th), and just above the Philippines (56th).
While thecountry has successfully expanded and diversified its exports, structuralchange towards high-technology and more knowledge-intensive production has beenslow compared to its peers. In 2016, Vietnam ranked 95th in the EconomicComplexity Index (ECI), while China ranked 18th.
According tothe report, Vietnamese firms showed a lower innovation level than what isexpected for the country’s level of development, particularly in terms ofproduct or process innovation. While Vietnamese firms innovate more than thosein Malaysia, Indonesia, Thailand and Turkey but less than those in China, theRepublic of Korea, Singapore and the Philippines they trail behind all of theirpeers on radical product innovation. Fewer firms in Vietnam (53 percent ofproduct innovators) report their main innovation to be new to their market,compared to Malaysia (75 percent), the Philippines (62 percent), and Thailand(86 percent).
A similarpattern could be observed among firms in the manufacturing sector, one of thecountry's most important economic pillars. In a recent survey conducted by theNational Agency for Science and Technology Information (NASATI) only 49 percentof firms reported innovating in terms of product or process.
While largerand joint-venture firms in Vietnam are more likely to undertake productinnovation than are smaller and domestic firms they are no more likely toundertake radical product (new to the market) or process innovation. Onbalance, firms operating in the services sector are less likely to undertakeinnovation compared to firms in the manufacturing sector.
As Vietnamseeks to reach high-income status by 2035, global trends in automation, exportconcentration and servicification present new opportunities and challenges forthe country's export-led manufacturing growth model. The country cannot counton less innovative tasks for an accessible pathway to continue to grow rapidly.With the rapid development of technology and automation, Vietnam's majormanufacturing and export sectors, which often are characterised aslabour-intensive may soon find themselves in a disadvantageous position.
In order toaddress the mentioned above issues, the report has made a number ofrecommendations for the country's policymakers and firms including a strongfocus on the adoption of new technologies in firms, especially insmall-to-medium-sized firms.
Governmentmust play an active role in the promotion of technology and innovation and inencouraging innovative ventures and finance through a simplified and streamlinedprocess of granting firms support.
Firms mustfind ways to attract skilled workers, especially Vietnamese workers from abroadand to improve managerial skills for innovation through business associationsnetwork.
A number oflong-term solutions to support the country's STI development included morerobust public-private sector collaboration, increase the allocation ofresources to instruments to facilitate technology adoption, as well as tostrengthen the overall capacity of the Intellectual Property Rights protectionsystem to enforce patent protection copyrights, and industrial property rights./.
VNA
