{"id":75279,"date":"2025-03-28T14:12:00","date_gmt":"2025-03-28T07:12:00","guid":{"rendered":"https:\/\/neu.edu.vn\/introducing-the-vietnam-annual-economic-review-2024-advancing-economic-institutional-reform-in-a-new-context-3\/"},"modified":"2025-03-28T14:12:00","modified_gmt":"2025-03-28T07:12:00","slug":"introducing-the-vietnam-annual-economic-review-2024-advancing-economic-institutional-reform-in-a-new-context-3","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-3\/","title":{"rendered":"Introducing the Vietnam Annual Economic Review 2024: Advancing Economic Institutional Reform in a New Context"},"content":{"rendered":"

\"\"<\/strong><\/p>\n

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

Institutions play a particularly important role in economic activity in all countries in general and Vietnam in particular. In Why Nations Fail<\/em>, Acemoglu and Robinson (2012) showed 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 what they wish to do. Such a system must also provide a reliable law enforcement mechanism\/institution to resolve disputes and a transparent, trustworthy government whose interventions in the economy are foreseeable and predictable. On the other hand, it must ensure the equitable distribution of economic gains, helping these inclusive institutions endure and expand.<\/p>\n

After nearly 40 years of Doi Moi (Renewal), Vietnam has developed an increasingly inclusive system of economic and political institutions. The sixth National Congress of the Communist Party of Vietnam in 1986 launched the renewal process and introduced a policy for a multisector economy; this thinking evolved at each subsequent congress. The Resolution of the 12th National Party Congress states: \u201cVietnam’s socialist-oriented market economy operates fully and consistently according to the laws of the market economy, while ensuring a socialist orientation appropriate to each stage of the country’s development. It is a modern and internationally integrated market economy;… the market plays the principal role in mobilizing and efficiently allocating development resources and is the main driver for unleashing productive capacity; state resources are allocated according to strategies, master plans, and plans consistent with market mechanisms.\u201d In particular, in its national development orientations at the 13th National Party Congress, the Party called for the comprehensive and coordinated improvement of 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, strengthening the National Assembly’s role in budget oversight and allocation, and creating mechanisms that encourage citizens and the business community to participate in drafting legal documents, among other changes.<\/p>\n

Efforts to reform and develop the 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 well for its transition to upper-middle-income status by 2030 and its goal of becoming a high-income country by 2045. Overall, Vietnam’s economic institutions still offer considerable room for reform before they can truly underpin the next stage of development. According to the Canadian Fraser Institute’s Economic Freedom of the World rankings for 2022, Vietnam ranked 99th overall out of 165 countries. 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 had a relatively good ranking (78\/165), its absolute score remained moderate 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 hinder 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, equality among economic sectors in business activities, and legal shortcomings in legislation on market exit (Tran Quoc Toan, 2024). Second,<\/em> limitations in the legal framework governing the state apparatus include: (i) insufficient guarantees of the rule of law, centered on limiting and controlling state power to promote democracy, minimize abuses and overreach of power, and contribute significantly to combating misconduct and corruption within the state apparatus; (ii) shortcomings in the division of responsibilities, coordination, and checks among state agencies in exercising legislative, executive, and judicial powers, particularly the constitutional protection function of the Supreme People’s Court; (iii) a cumbersome state apparatus and an inconsistent legal framework for 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

To achieve the goal of becoming a developed, high-income country by 2045, economic institutional reform clearly needs to lead the way. Vietnam’s economic institutions must be designed to inspire all citizens and businesses to innovate, tap into the country’s potential and the opportunities of the times, and expand internationally. 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 the overall economic freedom index and its component indicators in the coming years to levels equivalent 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. Therefore, alongside an 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, thereby proposing 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