{"id":75192,"date":"2025-04-09T15:55:00","date_gmt":"2025-04-09T08:55:00","guid":{"rendered":"https:\/\/neu.edu.vn\/introducing-the-vietnam-annual-economic-review-2024-advancing-economic-institutional-reform-in-a-new-context\/"},"modified":"2025-04-09T15:55:00","modified_gmt":"2025-04-09T08:55:00","slug":"introducing-the-vietnam-annual-economic-review-2024-advancing-economic-institutional-reform-in-a-new-context","status":"publish","type":"post","link":"https:\/\/neu.edu.vn\/en\/introducing-the-vietnam-annual-economic-review-2024-advancing-economic-institutional-reform-in-a-new-context\/","title":{"rendered":"Introducing the Vietnam Annual Economic Review 2024: Advancing Economic Institutional Reform in a New Context"},"content":{"rendered":"

Back<\/strong>ground<\/strong><\/p>\n

Institutions play a particularly important role in economic activity in all countries generally and in Vietnam specifically. In Why Nations Fail<\/em>, Acemoglu and Robinson (2012) demonstrated that a country’s long-term prosperity is determined primarily by its political and economic institutions. While current economic institutions determine future economic performance and resource allocation, current political institutions, through the distribution of political power in society, determine the choice of future economic institutions. An institutional system that supports long-term growth must be inclusive. On the one hand, it must provide the necessary foundations for a fully functioning market economy, including protection of property rights, freedom of contract, freedom of competition, and a reliable law enforcement mechanism\/institution to resolve disputes, among other things. These foundations encourage the vast majority of people to participate in economic activities, make the best use of their talents and skills, and enable individuals to pursue their goals. Such a system must also provide a reliable law enforcement mechanism\/institution to resolve disputes, as well as a transparent, trustworthy government whose interventions in the economy are predictable and foreseeable. On the other hand, it must ensure an equitable distribution of economic gains, helping sustain and expand these inclusive institutions.<\/p>\n

After nearly 40 years of Doi Moi (Renewal), Vietnam has built an increasingly inclusive system of economic and political institutions. The sixth National Congress of the Communist Party of Vietnam in 1986, which launched Doi Moi, introduced a policy of developing a multi-sector economy, and this concept evolved through subsequent congresses. The Resolution of the 12th National Party Congress states: \u201cVietnam’s socialist-oriented market economy operates fully and consistently in accordance with the laws of a market economy while ensuring a socialist orientation appropriate to each stage of the country’s development. It is a modern, internationally integrated market economy;… the market plays the primary role in mobilizing and efficiently allocating resources for development and is the main driving force for unleashing productive capacity; state resources are allocated in accordance with strategies, master plans, and plans consistent with market mechanisms.\u201d In particular, in setting out the country’s development directions at the 13th National Party Congress, the Party called for comprehensively and consistently improving the institutions for developing a socialist-oriented market economy, creating a favorable environment for mobilizing, allocating, and efficiently using resources, and promoting investment, production, and business activities. The Party’s policies and guidelines over successive periods were subsequently institutionalized in the Constitution, laws, and subordinate legislation, gradually creating a market-friendly legal framework that encourages all citizens to participate in economic activities and international economic integration. The political institutional system has also undergone adjustments toward greater decentralization to localities, a stronger role for the National Assembly in oversight and budget allocation, and mechanisms encouraging citizens and the business community to participate in drafting legal documents, among other changes.<\/p>\n

Efforts to reform and develop a market economy since 1986 have transformed Vietnam from a less-developed country into a member of the world’s middle-income group. This is an important time for Vietnam to review and assess its market economy institutions to prepare for the transition to upper-middle-income status by 2030, with the aim of becoming a high-income country by 2045. Overall, Vietnam’s economic institutions still offer considerable scope for reform if they are to provide a genuine foundation for the next stage of development. According to the Fraser Institute (Canada)’s Economic Freedom of the World rankings for 2022, Vietnam ranked 99th out of 165 countries overall. Several component indicators ranked low, including Sound Money (105\/265), Size of Government (106\/165), and International Trade (113\/165). Although Legal System and Property Rights ranked relatively well (78\/165), its absolute score remained average, at 5.15\/10, below the East Asia and Pacific regional average of 5.75\/10.<\/p>\n

Several recent studies have identified limitations in Vietnam’s economic institutions that impede economic growth. First,<\/em> regarding the economic legal system governing participants in the economy, major issues remain to be addressed, including the protection of property rights, the quality of the economic legal system, barriers to market entry, equal treatment of economic sectors in business activities, and legal deficiencies in legislation governing market exit (Tran Quoc Toan, 2024). Second,<\/em> regarding the legal system governing the state apparatus, limitations include: (i) insufficient safeguards for the rule of law, particularly the restriction and control of state power, to promote democracy, minimize abuses and arbitrary exercises of power to the greatest extent possible, and make an important contribution to combating misconduct and corruption in the state apparatus; (ii) aspects of the division of responsibilities, coordination, and checks among state agencies in exercising legislative, executive, and judicial powers that remain inappropriate, particularly the constitutional protection function of the Supreme People’s Court; (iii) a cumbersome state apparatus and inconsistent legislation on administrative delegation and decentralization; and (iv) inadequate accountability on the part of state agencies (Nguyen Van Cuong, 2021; Tran Quoc Toan, 2024; Le Minh Thong, 2025).<\/p>\n

Given the goal of becoming a developed, high-income country by 2045, economic institutional reform clearly must lead the way. Vietnam’s economic institutions must be designed to inspire all citizens and businesses to innovate and harness the potential of the country and the times to expand beyond national borders. Authority must be decentralized to individual cadres, civil servants, and public employees so that everyone feels confident in making decisions and taking responsibility in the interests of citizens, businesses, and the country. Expressed in internationally comparable figures, economic institutional reforms must bring Vietnam’s scores and rankings on both the composite economic freedom index and its component indicators in the coming years to levels equal to or above the average for high-income countries.<\/p>\n

Given the important role of institutional reform, an in-depth study of economic institutions in Vietnam is needed ahead of the 40th anniversary of the launch of Doi Moi. Accordingly, alongside its overall assessment of the economy in 2024, the Vietnam Annual Economic Review 2024 will focus on the theme \u201cAdvancing economic institutional reform in a new context\u201d<\/em>.<\/p>\n

Research Objectives<\/strong><\/p>\n

The Vietnam Annual Economic Review 2024 by National Economics University (NEU) adopts the theme \u201cAdvancing economic institutional reform in a new context\u201d <\/strong>with the aim of providing a comprehensive review of Vietnam’s economy in 2024. The report also assesses the current state of Vietnam’s economic institutions and, on that basis, proposes policy recommendations for economic management in 2025 and key economic institutional reforms in the new context.<\/p>\n

Based on this overall objective, the report pursues the following specific objectives:<\/p>\n