Viet Nam 2045 : Breaking Through - Institutions for a High-Income Future

Overview & Synopsis

While Viet Nam’s institutions may not have the forms that exist in other countries, it is the functions of institutions, rather than specific forms, that are important. This study adopts a framework based on the functions of institutions in the quest to support an evolving role of the state: market-creating, market-stabilizing, market-regulating, market-complementing, and market-legitimizing institutions, as well as the institutions for a capable and accountable state. Part I of this study will first survey the landscape of institutions in Viet Nam according to this framework. Some institutions may be essential for growth in the long term, but do not seem to be binding constraints to Viet Nam’s growth. Others are more foundational and will be the subject of deeper dives in Parts II and III of this report: those for a growth-supporting state (market-complementing and market-regulating) and those for the state’s capability to deliver with efficiency and accountability. This emphasis is also consistent with the experience of countries that escaped the middle-income trap, many of which did so by improving the predictability of the implementation of laws, by boosting quality and quantity of public investment, and by improving the quality and motivation of their public administration.