Article 4: Strategic choices for 2026-2030 — Vietnam's position in the new global economic order

The 2026-2030 period for Vietnam is not merely the next growth cycle to set a growth target, but a hinge moment to reposition its position in the global value chain. Yet Vietnam faces the risk of being “locked in” at the bottom of the value chain with low profitability. The final piece in a series on Vietnam’s new growth architecture examines how to redesign the structure of the economy and industrial policy so that investment translates into a leap in national productivity.

The world economy is entering a broad restructuring phase in which value chains, technology, and geopolitical competition simultaneously shape the global development order. In this context, advantage no longer comes from resource scale alone, but from the ability to choose strategic directions and design growth models that fit.

For Vietnam, the 2026-2030 period is therefore not simply another development cycle to grow by a given rate; it is a turning point that determines how growth will be pursued and what position Vietnam will occupy in the new order. The central question is whether a high growth objective is feasible if the structural design remains largely unchanged.

The world enters a new structuring cycle

After decades of globalization, the world economy is entering a new restructuring cycle driven by three main forces.

First, global value chains are being restructured toward multi-center hubs as multinational corporations diversify production locations to reduce geopolitical risk and trade disruptions.

Second, technology—especially artificial intelligence (AI)—is becoming a decisive driver of national productivity. Unlike previous industrial revolutions, AI not only improves production processes but also changes how firms organize, make decisions, and operate markets.

Third, geopolitical competition is becoming a central axis of industrial policy. Major economies increasingly use subsidies, tax incentives, and industrial policy to gain advantages in strategic sectors such as semiconductors, clean energy, and high technology. These moves are reshaping production and trade patterns, benefiting countries that adapt fastest.

Vietnam’s growth model faces structural limits

Vietnam has benefited for many years from growth driven mainly by investment, abundant labor, and trade integration. However, as the economy moves toward a higher-growth, faster, more sustainable, and higher value-added development phase, traditional drivers are showing limits.

The biggest challenge is not only mobilizing more resources, but redesigning institutional structures and the development ecosystem so that resources are used effectively. The series on Vietnam’s growth architecture outlines four parts: shifting from “growth by inertia” to “growth by architecture,” building an intentional development ecosystem and the structure of economic power, redesigning the state’s role, and making strategic choices for Vietnam in the new economic order.

Vietnam is emerging as a key destination amid shifting investment and production. Its geoeconomic position, extensive trade agreements, and stable political environment help it anchor an important link in regional and global supply chains. Over the past decade, exports grew rapidly, production expanded, and foreign direct investment (FDI) surged, reflecting deep integration into the global production system.

However, the article notes that this integration has largely occurred in lower-value stages of the value chain. Major export sectors still rely heavily on imported components, inputs, and advanced technology, meaning Vietnam has participated in global value chains but has not yet taken full control of the chain.

Geopolitical economic competition and the industrial policy challenge

A key feature of the current phase is the rise of geopolitical economic competition. Value chains are fragmenting into geo-economic blocs, and trade flows are shaped less by labor-cost advantages and more by geopolitical reliability.

Countries compete not only on markets but also through industrial policy and technology. Large-scale support in areas such as semiconductors, clean energy, and digital technology is redefining global competition. For middle-income economies like Vietnam, the strategic question is how to leverage manufacturing shifts without becoming dependent in the value chain.

The article argues that answering this requires more than attracting investment. It requires upgrading domestic industrial capacity, developing supporting industries, and promoting innovation. Without a clear strategy, investment inflows may expand production capacity without delivering a step change in productivity or technology. In geopolitically driven competition, attracting investment is only the first step; long-term advantage depends on controlling new technologies.

AI and the race for national productivity

AI is presented as one of the most important determinants of productivity in the coming decade. It can automate production and also change how firms decide, optimize supply chains, and develop new products.

For developing economies, AI can create an opportunity to “shortcut” productivity gains if integrated effectively into production systems and governance. But leveraging AI depends on human capital quality, digital infrastructure, and an innovation ecosystem. If these foundations are not developed in time, AI may become a technology wave the economy mainly absorbs as consumers rather than as creators and producers. In the article’s framing, “the country that controls knowledge controls productivity.”

At the same time, Vietnam faces structural constraints that may hinder long-term growth:

• Many export sectors have low value added due to underdeveloped supporting industries; innovation capacity remains limited and R&D investment lags behind regional peers.
• The corporate structure is imbalanced: the FDI sector dominates exports while domestic firms are comparatively small and technologically limited, with domestic corporate activity skewed toward distribution and consumer services.
• Resource allocation is not efficient, with investments spread too thin, leading to wastage and initiatives pursued without viability.

The article notes that these constraints may not cause severe near-term consequences, but in the long run they can cap growth potential. Growth can be expanded by capital and labor, but a true leap requires structural change.

Vietnam’s position in the global value map

In the coming decade, the strategic question is not only how fast Vietnam grows, but where it stands in the global value chain. The article describes three basic positions:

• (i) a low-cost manufacturing hub where firms mainly perform processing and assembly;
• (ii) a mid-tech manufacturing center where firms participate more deeply in product design and component production;
• (iii) an innovation hub where value is created primarily through research, technology, and branding.

Each position corresponds to a different economic structure and development ecosystem. The article emphasizes that in the global value chain, controlling knowledge is tied to controlling value.

It also argues that while a high growth target may be supported by the economy’s potential, the key issue is what will drive growth. If growth is powered mainly by expanding investment and credit, it can be sustained for a period but carries risks to investment efficiency and macro stability. Over the long term, productivity is the decisive driver of sustainable growth, which requires shifting toward higher value-added sectors and relying more on innovation and knowledge production.

Industrial policy in many economies has historically focused on attracting investment, expanding production, and promoting exports. But in an increasingly competitive geopolitical economy, the article says this approach is changing: major economies compete not only through trade, but through control of technology, supply chains, and strategic industries—making industrial policy central to development strategy.

Vietnam’s industrial policy in geopolitical economic competition

The article argues Vietnam’s industrial policy must gradually shift from “attracting production” to “upgrading its position in the value chain.” Instead of only expanding production capacity, policy should strengthen domestic technological capabilities, link domestic firms with global value chains, and progressively cultivate industries capable of leading innovation.

Potential strategic sectors for future growth include digital industry, semiconductors, green industry, new energy, and AI/data-related high technologies. In this context, the article suggests industrial policy does not necessarily need to pick winners, but can emphasize building an ecosystem conducive to innovation, technology, and business development.

It also highlights the state’s role in creating institutional foundations, infrastructure, and human resources for new industries to form and develop. In geopolitical competition, the article states that the country controlling technology and supply chains will command long-term development advantages.

It further notes that successful long-term growth trajectories often rest on robust innovation ecosystems, where innovation is sustained through networks linking high-tech industries, R&D systems, universities, and technology firms. In a rapidly changing technological era, productivity depends on the ability to generate, absorb, and disseminate knowledge across the system.

Policy directions for 2026-2030

For the development path in the new phase (2026-2030), if the goal is not only high growth but also a higher position in the global value chain, the article calls for shifting from expanding production to upgrading the economy’s structure. It identifies industrial policy and innovation as two pillars of the new development strategy.

First pillar: Upgrade industrial policy to elevate the value chain

The article calls for increasing technological capability and value addition rather than merely expanding production capacity. It suggests considering strategic industries with high value added and broad technology spillovers, naming sectors such as semiconductors, AI, new energy, biotech, and green tech as potential backbones of a new growth era in Vietnam.

It also emphasizes strengthening domestic firms—especially those able to participate more deeply in global value chains—through policy support in technology, finance, and human resources development to boost domestic competitiveness. A crucial element is stronger linkages between domestic companies and foreign investors so that domestic enterprises can engage more deeply with multinational suppliers and improve value addition.

Second pillar: Build a robust innovation ecosystem with knowledge and technology at its core

Beyond industrial policy, the article argues that a strong innovation ecosystem is decisive for upgrading Vietnam’s economic structure. It describes innovation in many economies as driven by close integration among the state, firms, and the research/education system, creating continuous flows of knowledge, technology, and business ideas.

For Vietnam, the article lists policy directions including increasing R&D investment, developing innovation and technology centers, promoting a startup ecosystem, creating an institutional environment conducive to technology and knowledge investment, and aligning education and training with the needs of a knowledge-based economy, especially in STEM fields.

It also assigns a decisive role to the business sector in transforming the growth model. As global competition increasingly relies on knowledge and technology, domestic firms should shift from cost advantages to innovation and technological capability. The article calls for Vietnamese enterprises to boost R&D investment, apply digital technologies and AI in management and production, and participate more deeply in global innovation networks and value chains.

The article notes that the Party and the State aim for double-digit growth in the new phase, and argues that sustainable high growth over the long term depends not only on investment size or expanded production, but primarily on the economy’s structure and the quality of growth drivers.

Opportunities for a leap in development

In an increasingly competitive geopolitical landscape, and with technology reshaping productivity, the article argues that achieving high growth will be difficult if Vietnam continues to rely mainly on traditional drivers. The two-digit growth objective is framed as requiring reorganization of the growth model, with industrial strategy, innovation capabilities, and firms’ positions in global value chains determining whether the objective becomes reality.

It states that each economy has only a few moments when international conditions, technology, and domestic strengths align to create a leap forward. For Vietnam, the 2026-2030 period could be such a moment because global value chains are restructuring, new technologies are opening future industries, and geopolitical competition is forcing many nations to redesign development strategies.

If Vietnam uses this period to upgrade its economic structure, promote innovation, and raise firms’ technology capabilities, the article suggests Vietnam could ascend to a new level of development with growth driven by knowledge, technology, and productivity. It also cautions that national opportunities are not unlimited and open only to economies ready to reposition themselves in a changing order.

Conclusions on Vietnam’s development institutions

From the four-part series, the article presents three principled conclusions about Vietnam’s development institutions in the new era.

• Growth is not solely a function of expanding capital and labor; it results from a growth architecture that shapes how resources are allocated. Growth from inertia to a structured architecture depends on how resources are allocated, not only on resource quantity.
• The economy’s political–economic structure determines the flow of capital, credit, land, and development opportunities. If organized around privileges, growth may be high in quantity but lack quality. If resource access is allocated based on competition, transparency, and value creation, the economy can shift to productivity- and innovation-driven growth with long-term efficiency.
• Strategic choices are not only about sectors, markets, or growth targets. The key is to design a purposeful development ecosystem where the state’s role is redefined toward value creation, and economic power is organized so resources are allocated by value-creating capacity—supporting higher growth and more sustainable long-term development.

(*) The article is authored by a former General Director of the General Statistics Office, Ministry of Planning and Investment (now the Statistics Office, Ministry of Finance).