The World Bank’s country director Victoria Kwakwa gives a speech at a recent workshop in HCMC Photo: Thoai TranThe norms of a centralized economy that uses planning and targets to drive growth are affecting the country’s economic stability, the World Bank country director in Vietnam has said.

Victoria Kwakwa, answering a question raised at an online forum organized by newswire Vietnamnet last week, said in the case of Vietnam there are two central issues.

Firstly, we can see that capital formation is very high, up to 40 percent of GDP, which means that the amount of money we have to spend to obtain a unit of growth is not small.

So the problem is that Vietnam still cannot make investments effectively.

The development model Vietnam has chosen is based on the public sector, which is therefore allotted important resources. However, there is much evidence that the resources are not used effectively.

So the country should redirect its investments to other sectors like the private to obtain higher efficiency.

Secondly, we need to pay attention to the environment when considering the sustainability of economic growth. If economic growth brings bad consequences to the resources and health, the growth will not be sustainable.

When we talk about sustainable development, this means that the majority of the Vietnamese people can enjoy benefits from the growth.

So what will contribute to sustainable development in the case of Vietnam?

Firstly, Vietnam should facilitate small and medium-sized enterprises, which create the most jobs, with more favorable conditions by allocating more resources to develop their business, employ more workers, and pay high enough salaries.

Second, the same policy must be applied to the agricultural sector which provides a livelihood for most Vietnamese.

Vietnam has been very successful in developing agriculture and is now a big rice, coffee, tea, and seafood exporter. However, farmers remain poor and do not enjoy much benefit from the growth.

So, while a high growth rate is very important, the sustainability is even more important.

It is not international organizations like the World Bank who demand “growth at all costs.”

The fact is that since donors assess the success of economies based on their GDP growth, borrowing nations strive to achieve high growth rates at any cost, leading to bad consequences, including poor macroeconomic stability and growth quality.

Kwakwa hoped that in the next five to 10 years Vietnam will focus on the quality and efficiency of growth instead of just figures.

Source: VNN/ Tuoi Tre