(Mr): Phung Xuan Minh. [Chairman of the Board of Directors of PT Group & Saigon Ratings]
From the experiences of Japan, South Korea, Singapore, Taiwan, and Israel, it is clear that success depends on the ability to correctly identify contemporary trends, choose appropriate strategies, and consistently implement them. In the 21st century, economic competition is increasingly intertwined with technology, data, energy, supply chains, and the quality of human resources. Countries that are slow to reform or continue to rely on cheap labor risk falling behind.
Global economic development trends in the 21st century
The global economy is entering a period of slower growth and greater uncertainty. According to the World Bank, global growth in 2026 is projected to be around 2.5%, lower than the 2.9% of 2025. Geopolitical conflicts, energy prices, high public debt, climate change, and unpredictable trade policies are strongly impacting investment.
Countries and large corporations are restructuring their supply chains based on criteria of safety, flexibility, and proximity to markets. Diversifying supply sources, producing near consumption points, and collaborating with trusted partners are increasingly influencing investment decisions.
Global FDI is projected to reach approximately $1.6 trillion in 2025, a 14% increase. However, actual investment in new manufacturing capacity remains fragile, while capital flows prioritize semiconductors, data, clean energy, and logistics.
Green transition has also become a new competitive standard. Carbon taxes, traceability, and environmental requirements are forcing businesses to innovate technologically, reduce emissions, and ensure supply chain transparency.
In this context, the lines between economics and security are increasingly blurred. Semiconductor technology, energy, data, strategic minerals, and logistics systems are no longer just commercial matters but have become integral parts of national self-reliance.
Economies must therefore simultaneously pursue two goals: maintaining integration to exploit international markets and resources, while strengthening domestic capabilities to reduce excessive dependence on a few strategic markets, technologies, or supply sources.
The role of the Fourth Industrial Revolution
The Fourth Industrial Revolution connects artificial intelligence, big data, cloud computing, robotics, the Internet of Things, biotechnology, and new materials, spreading rapidly to almost all industries.
AI is becoming a foundational technology in data analysis, design, and manufacturing. The WTO estimates that if the infrastructure and skills gap is narrowed, AI could boost global trade by 34–37% and global GDP by 12–13% by 2040.
The development of AI can help businesses shorten research time, optimize production operations, reduce costs, forecast market demand, and personalize products. Digital technology also opens opportunities for small businesses to access customers, capital, and knowledge on a global scale.
However, that opportunity comes with challenges regarding employment. The ILO states that about a quarter of the world’s workforce is employed in jobs with some degree of exposure to AI-generated content. The impact is likely to be primarily a change in job content rather than a complete job elimination. Nevertheless, that opportunity comes with challenges regarding employment. The ILO indicates that about a quarter of the world’s workforce lacking digital skills will be at risk of losing their competitive edge.
The development gap in the new era is therefore measured not only by income but also by access to data, digital infrastructure, technological skills, and the ability to apply AI. A country may import modern machinery, but without the right workforce and institutions, it will be difficult to translate technology into actual productivity.
The Fourth Industrial Revolution is not just a race for machines, but a revolution in education, governance, data, and institutions. Countries that popularize digital skills and connect research with businesses will have the opportunity to shorten the industrialization process.
The breakthrough trend of pioneering nations
The Global Innovation Index 2025 ranks Switzerland, Sweden, the United States, South Korea, and Singapore among the leading countries. China enters the top ten economies for the first time, and also holds a prominent position in patents, research investment, and innovation clusters.
Pioneering countries are building ecosystems in which universities, research institutes, businesses, investment funds, and the government all participate. Research is linked to the market, and public policy facilitates the testing and commercialization of technology.
They also focus on developing concentrated innovation clusters. In these clusters, human resources, investment capital, laboratories, technology companies, and specialized services are connected within a single ecosystem. This connectivity accelerates the transformation of ideas into products and the bringing of products to market.
Breakthrough nations don’t pursue innovation in a scattered manner. They select strategically important sectors that align with national capabilities and market trends, such as semiconductors, artificial intelligence, biotechnology, new energy, aerospace, cybersecurity, and quantum technology.
These economies share a common characteristic: a shift from increasing quantity to improving quality, while simultaneously possessing technology, standards, data, brands, and distribution networks.
This shows that a country cannot improve its standing by merely participating in processing and assembly stages. To capture higher value chains, a country must have strong businesses, excellent human resources, and the ability to research, invent, and commercialize technology.
The risk of getting stuck in the middle-income trap.
Many economies have reached middle-income status but have experienced prolonged periods of slower growth and have been unable to move up to high-income status.
The middle-income trap emerges when cheap labor, resources, investment capital, and export processing gradually lose their competitive edge, while new drivers have yet to emerge. Wages rise but productivity does not increase proportionally; domestic businesses are small; technology is dependent on external sources; and education and institutions are slow to adapt.
An economy can achieve high export growth rates but remain trapped in a low value-added cycle if the majority of technology, components, brands, and distribution networks belong to foreign companies. In this case, the value retained domestically is limited, and self-reliance is not improved proportionally.
The World Bank proposes the “3i” strategy: investment, technology adoption, and innovation. In the initial stage, the country needs to accumulate capital, build infrastructure, and improve the quality of its workforce. Once it reaches middle income, the task becomes adopting and disseminating advanced technology. To advance to high income, the economy must develop innovation capacity, leading enterprises, and high-value products.
Escaping the middle-income trap is a process of continuous reform. The state must improve the quality of its institutions, businesses must invest in technology, and workers must have access to lifelong learning.
Identifying the flow to shape the future.
Global competition in the 21st century is a competition of adaptability. Population size, resources, and geographical location remain important, but they no longer guarantee success. The decisive factor lies in institutions, science, people, businesses, and the speed of transforming knowledge into economic value.
For Vietnam, correctly identifying global trends is essential for rapid yet sustainable progress. Vietnam needs to leverage supply chain shifts, the digital economy, and green transformation; while simultaneously strengthening its domestic capabilities, mastering technology, and developing national enterprises.
International integration must be linked to enhancing the capacity to absorb technology, developing supporting industries, and increasing the domestic value-added ratio. Attracting FDI needs to shift from prioritizing the quantity of capital to the quality of projects, the ability to transfer technology, and the level of linkage with Vietnamese businesses.
The opportunities of the new era are immense, but they won’t last forever. Only through strong reforms and decisive action can Vietnam overcome the middle-income trap, elevate its position in the value chain, and move closer to its aspiration of national strength, prosperity, and a happy people.
