The movement of the world economy in the first decades of the 21st century is witnessing epoch-making turning points, from the fourth industrial revolution to geopolitical shifts and the urgent need for sustainable development. After nearly 40 years of implementing the Doi Moi (Renewal) process, Viet Nam has achieved historically significant achievements, bringing the scale of the economy and the people’s lives to a new level.

However, standing on the threshold of the new era, the country is facing contemporary challenges. Traditional advantages of cheap labour and natural resources are gradually reaching their limits, and the risk of the middle-income trap is looming.

Macroeconomic stability: the pillar of sustainable development

The first and most important requirement in the new growth model is substance. Substantive growth means that each percentage point of GDP must contain a higher level of knowledge; quality must not be sacrificed for illusory numbers. To achieve this, science and technology and innovation are no longer external supporting factors but must become “endogenous variables” that determine the essence of the new economic model.

Furthermore, in modern economic theory, growth based on dynamic performance requires not only an increase in the scale of existing industries but also a shift of resources from low-productivity industries to higher value-added industries such as high-tech industries and digital and knowledge-based services. This means that Viet Nam must penetrate higher stages in the global value chain — from design and manufacturing to mastering core technologies like semiconductors or AI — instead of just focusing on processing and assembly.

To measure its true potential, the most important indicator is the contribution of total factor productivity (TFP). Lessons from countries like the Republic of Korea, Japan, and Singapore have shown that after a period of strong capital accumulation in the 1970s, it was the breakthrough in TFP in the following decades that helped these countries overcome the middle-income trap and become developed nations.

Substantive growth also requires that every percentage point increase in GDP today does not harm the foundation for tomorrow’s development. Therefore, natural resources need to be viewed from the perspective of a green and circular economy, where exploitation must go hand in hand with conservation to avoid depleting resources for future generations. If Viet Nam only pursues speed while neglecting quality and the environment, the price to pay will be very high, as evidenced by the pollution and resource depletion that many countries around the world, including Viet Nam, are currently facing.

While promoting the transformation to a substantive growth model, we must also remain committed to the goal of macroeconomic stability, controlling inflation, and ensuring major balances. This is a prerequisite for sustainable growth and a decisive factor in the safe operation of the economy against external shocks. The history of global economic development has shown that countries that allow hyperinflation or uncontrolled public debt to occur often pay the price with decades of lost growth and stagnant development.

With public debt at a safe level (around 37% of GDP), Viet Nam has considerable fiscal space to mobilise capital for development investment while ensuring sustainability and macroeconomic stability. However, this does not mean we can be complacent, as recent economic growth has been driven by public investment, leading to increased government borrowing and a credit-to-GDP ratio that has reached a critical level. In a world of geopolitical volatility, forecasting and risk management capabilities are vital.

Macroeconomic stability is also reflected in the maintenance of major balances in the budget, foreign trade, and energy sectors. This not only helps the economy flexibly respond to adversity but also creates a transparent business environment, reduces transaction costs, and thus enhances the overall efficiency of the economy.

The golden time to define a new growth model

In his closing speech at the Second Plenum of the 14th Central Committee of the Communist Party of Viet Nam, General Secretary To Lam clearly outlined the core “Four Principles” for achieving double-digit growth and the motto of “Strategic autonomy – Steadfast adherence to the two 100-year strategic goals – Working together with determination and resolve for the people’s well-being and happiness”.

The ultimate and most profoundly humane goal of the new development model is for the happiness and prosperity of the people and social justice. Economic growth is not just dry numbers on performance reports but must be transformed into real improvements in the material and spiritual lives of the people. Raising people’s real incomes, ensuring they are not eroded by inflation, and implementing synchronised wage reforms are essential steps to narrow the development gap.

To achieve this, all policies and investment resources must be directed towards creating tangible value for the community. Viet Nam needs to consider investment in “social infrastructure” — including social housing, healthcare, and education — as “strategic infrastructure” in the state's leading economic role, equivalent to highways, airports, and seaports.

A happy nation is one where all segments of the population have the opportunity to directly and fairly benefit from the fruits of growth. Social justice is also reflected in ensuring the legitimate rights and interests of all sectors, from micro-enterprises to individual business households, ensuring they are not marginalised in the digitalisation and modernisation of the economy. National governance in the new era must be “humanistic,” using the interests and satisfaction of citizens and businesses as the primary measure of effectiveness, thereby creating a solid foundation for social consensus, inspiring a desire for contribution and national pride.

Looking back at the development journey of developed countries, we see that there is no path to prosperity without resolute reform efforts and unwavering political belief in the success of innovation. Viet Nam currently has a golden opportunity to establish a new growth model. With a modern, transparent governance system and a strong aspiration for progress, achieving substantial growth, maintaining macroeconomic stability, and ensuring the happiness of the people are not merely economic goals, they are a commitment from today’s generation to the nation's future, with the aim to become a developed country by 2045.

To realise the aspiration of becoming a developed, high-income country by 2045, the transition from an extensive growth model to one based on efficiency, innovation, and a solid institutional foundation is no longer an option, it’s a historical imperative.