Study shows innovation increases productivity in Viet Nam

Monday, Nov 24, 2014 18:36

Canned food packaging production line in My Chau Printing & Packaging Holdings Company in HCM City. A joint study of World Bank and Organisation of Economic Co-operation and Development (OECD) shows that Viet Nam's business sector accounts for a very small share of research and development expenditure. — VNA/VNS Photo Dinh Hue

HA NOI (Biz Hub) — Viet Nam needs to rely more on innovation-driven productivity, which requires considerable improvement in its domestic innovativeness, to boost its economy.

Gang Zhang, senior economist of the Organisation of Economic Co-operation and Development (OECD), stressed this point at the launching ceremony here for the OECD's joint study with the World Bank on November 24.

The study, entitled The OECD-World Bank Review of Science, Technology and Innovation in Viet Nam, looks at the key elements, relationships and dynamics that drive the Vietnamese innovation system and opportunities to enhance it through government policy.

Zhang explained that Viet Nam was approaching the crossroads of its development, and previous sources of growth are diminishing in power, raising the threat of a middle-income trap.

"Current science, technology and innovation (STI) capabilities are weak, and much needs to be done to improve them," he noted. "Research and development (R&D) is still a peripheral activity, both in the business and the public sector."

According to the report, Viet Nam has a wide range of weaknesses, including low levels of productivity and income, inadequate framework conditions and disincentives for innovation, and weak public sector research performance.

The country has also faced threats such as unfavourable macroeconomic developments, a growth slowdown and increasing brain drain.

The study also shows that Viet Nam's business sector still accounts for a very small share of R&D expenditure. It says that for a broad range of enterprises, improving in-house innovation capabilities, which require skills to engage in design, engineering and marketing, as well as information technology and R&D, should be an overarching priority.

The joint review provides several recommendations for policy makers to foster STI in Viet Nam. It emphasizes on improving framework conditions for innovation and public governance of the innovation system, strengthening the human resources base for innovation, fostering in the business sector, increasing the contribution of public research and fostering innovation linkages.

At the launching, Victoria Kwakwa, World Bank country director for Viet Nam, said: "Increased competition in globalising markets means that it is more important than ever to invest early in advanced technological capabilities. This will help Vietnamese enterprises to better position themselves in global value chains."

Dao Manh Thang, deputy director of the National Agency for Science and Technology Information under the Ministry of Science and Technology, revealed that in the future, his agency would implement a pilot programme to assess a few scientific and technological organisations and build a science and technology map.

"The map will include an innovation process in the business sector to help enterprises recognise where they are in the world. It provides companies with statistics on patents for inventions, new technologies, and so on, to boost technology transfer in the country," Thang said. — VNS

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