Rethinking Innovation Policy in Viet Nam at the dawn of IR4.0

by Ida Uusikyla, UNDP Innovation consultant, and Dr. Robyn Klingler-Vidra, Senior Lecturer in International Political Economy at Kings College London

March 16, 2020



The Need for a Pivot

Societal challenges have become increasingly complex and intertwined. Technological advance promises tremendous opportunities for economic growth, but also threatens to replace jobs, by automating tasks that have been the basis of people’s livelihoods. Job losses for those already vulnerable at the same time that technology is endowing founders and investors with tremendous wealth stands to widen inequality. The current models of economic growth are also increasingly challenging the perseverance of the environment, with waterways suffering pollution and declining air quality hurting people and planet. For us, this complexity and urgency of today’s social and environmental challenges mean that current approaches to innovation policy-making are in need of a serious pivot. In this brief post, we outline our thinking - based on recent and ongoing research - on ways in which innovation can be managed in a more inclusive way in Viet Nam. A more inclusive approach, we argue, can help Viet Nam harness the opportunities of the Industrial Revolution 4.0, without compromising equitable growth.

Historically, Viet Nam has been successful in undertaking such a transformative task. With the Doi Moi – a series of economic and political reforms implemented in the late 1980s – the country witnessed remarkable economic growth (7% annually), graduating from one of the poorest countries in the world to a lower middle-income country by 2010. The equitable nature of this growth has been key to Viet Nam’s success in reducing poverty and advancing human development. Extreme poverty rates in the 1990s - nearly 63% - were reduced to less than 2% by 2016. A staggering 43 million Viet Namese were lifted out of extreme poverty. What’s more, inequality - as measured by the Gini Coefficient - stayed relatively stable over this period, with Viet Nam’s Gini coefficient of 35.7 in 1992, being recorded as 35.3 in 2016 (while some of the intervening years saw a higher coefficient, it never surpassed 37). Together, the growth rate and stable measure of inequality underscores the widespread notion that Viet Nam has achieved exceptional equitable growth since market development began in 1986. 

But as we said at the outset, in light of the remarkable advance in the pace and breadth of technological innovation, there is reason to question whether such equitable growth be sustained as Viet Nam moves towards a higher middle-income status. Here are reasons to be optimistic about the IR4.0’s ability to fuel growth across Viet Nam’s traditionally strong sectors, such as furniture, textiles and coffee. Also, Viet Nam has demonstrated its ability to quickly become a powerhouse in various technologies, including ones that are good for people and the planet. An example being the rise of the surge in Viet Nam’s production of solar power. Still in 2017, there was little to no solar power activity in the country. But then the Government offered a generous tariff for solar power producers ($0.09/kwh produced). The result of the incentive has been exceptional. As The Economist reported, by the end of 2019, Viet Nam had over 5 gigawatts - more than Australia produces. It's now grappling with what to do with the new-found capacity.

However, there is also concern that the current thrust of science, technology and innovation (STI) policies, supporting innovation by large (often publicly-linked) firms and startups that are modelling a Silicon Valley approach, threatens to exacerbate technology’s tendency to replace those most vulnerable, while concentrating opportunity and financial rewards in urban, educated elite. The Government’s focus on supporting technological innovation within certain firms and industries risks accelerating already growing inequalities in productivity and earning potential. To compound the problem, there is uncertainty as to who has the mandate to lead innovation policy for the future in Viet Nam. Research reveals that inter-ministerial coordination is problematic, and ministries that may elsewhere be the clear leaders of STI strategies, such as the Ministry of Science and Technology, lack the resources and convening power. Innovation, in Vietnamese policymaking as in countries around the world, is still thought to be the narrow remit of Science and Technology policy. Innovation is - not yet - something that can and should be encouraged across society, and by the Government. Despite this, innovation remains one of the key drivers for the coming Socio-Economic Development Strategy. 

Viet Nam is at an inflection point, in its economic development trajectory and in anticipation of its next Socio-Economic Development Plan (SEDS 2021-2030). This offers a unique opportunity to “get innovation policymaking right”, so that future growth can be both robust and inclusive. To do so, key questions need to be asked about how innovation policy-making should be conceived and implemented:

  1. How might we move beyond the “Silicon Valley” way of understanding innovation toward a more inclusive approach?

  2. How might we enhance innovation policy coherence and directionality for inclusiveness in Viet Nam?



Beyond Silicon Ambitions: From Silicon Valley to Asia Pacific

There is a major opportunity for policy makers - in Viet Nam and across the Asia Pacific region - to play an active role in creating the conditions for innovation that are not focused on single point solutions, but rather on a more systemic approach to addressing frontier challenges. Inclusive innovation is a type of innovation that fosters inclusion, both in terms of who is to benefit from the innovation, and who is included in the production of innovation that offers new solutions. A more inclusive brand of innovation helps to combat growing inequality, while accelerating the achievement of economic growth and the SDGs (think of SDG 7, “Affordable and Clean Energy” and Viet Nam’s exceptional rise in solar energy). In light of the potential inherent in this approach to innovation, in 2019 UNDP, through the Regional Innovation Center based in the Bangkok Regional Hub for Asia Pacific, commissioned NESTA to undertake a study on “Emerging models on Inclusive Innovation: an ASEAN perspective”, which was presented at the ASEAN-China-UNDP Symposium in Hanoi in September 2019. The study began the exploration into the meaning and emerging models of inclusive innovation policy in ASEAN. It uncovers innovative ways in which governments across the region are involving citizens into innovation policymaking, are targeting disadvantaged demographics for greater participation in the production of innovation, and are thinking of ways in which technological innovation can improve social and economic inclusion. 

Building on the findings from this study, UNDP Viet Nam is working  to further understand and strengthen the concept of Inclusive Innovation in Viet Nam. One of the ways we have approached this is to further the collaboration and coherence of policy makers in the innovation space, addressing the challenges that have been identified about insufficient interministerial coordination and leadership in STI policy. And, simply, include a broader set of actors in conversations about how to encourage innovation for, and by, wider society. In December 2019, we convened a first workshop in Hanoi on inclusive innovation with representatives from various ministries, associations and think tanks. We wanted to offer a platform for key policy stakeholders to gather around the same table to discuss innovation, and how it can be more inclusive in Viet Nam. Crucially, we wanted to create a space where participants could shine a spotlight on approaches that are already underway, to think about how to scale them, and bring together greater support, across ministries and levels of government. 

We believe that the timing of efforts to step up inclusive innovation policy making in Viet Nam is critical; in addition to the forthcoming SEDS, the Ministry of Planning and Investment (MPI) recently proposed the establishment of a National Innovation Center (NIC). The NIC will be built outside of Hanoi over the coming years, as a crucial physical space for innovation to happen, through the shared activities and co-location of actors across government, industry and academia. But, such innovation centers built elsewhere in the world in the 20th century took a narrow focus. How could such a Center be designed to foster inclusive innovation for the IR4.0? What if the center was not only focused on S&T advances? What if, instead, the NIC aimed to solve societal challenges in Viet Nam and across the Asia Paific region? What if it could be reimaged as a space that brought a wider section of society together, to share ideas about problems and solutions? 

We are excited about the potential for Viet Nam’s NIC to be a model for how to build physical spaces for innovating to achieve the SDGs, to propel innovations that improve the livelihoods of wider society, and to break down traditional barriers between innovation and the local community. Given the potential to set a new standard, the NIC represents an important opportunity to catalyze policy coherence and take a broader perspective on innovation policy development in Viet Nam. In moving beyond the status quo of a narrow technology focus directed at niche segments of the society, and towards a more generous understanding of innovation and those who are producing it. Similarly, this work aims to feed into the development of Viet Nam’s next SEDS, particularly contributing to the pillars on the development of human resources, infrastructure and institutions.

What Does Inclusive Innovation Mean for Viet Nam?

There is a strong rationale in favor of a broader understanding of innovation in Viet Nam. The complexity of the challenges demands a variety of actors and voices around the table when developing policies or solutions as for example, one can build an innovation park that increases equality or decreases it, depending on the choices that are taken. A more coherent and collaborative approach will propel Viet Nam into new growth pathways that help all people adapt to intractable development challenges to ensure as the country moves forward to Leave No One Behind.

As mentioned earlier, in December 2019, UNDP Viet Nam together with the Ministry of Planning and Investment, organized the first Action-Oriented Research session to gather key innovation policymakers around the table to discuss inclusive innovation (action-oriented research is a capability that has been increasingly developed by UNDP Viet Nam as a new form of collaborative knowledge creation.) This was not standard practice for the actors in the innovation policy space. Nevertheless, the participants seemed to be unanimous on the concept of Inclusive Innovation and its importance. The outcome of the meeting provided key insights into what inclusive innovation means in Viet Nam, and how it can be better supported. Specifically:

  • Empowering wider-society to engage as innovators – Leave No One Behind! 
  • Better involvement of people into the policymaking process
  •  Bottom-up approach – empowering the grassroots innovators
  •  Inclusive innovation as the driver of inclusive growth

The participants agreed on the definition of Inclusive Innovation as: 

innovation of, by and for all as both innovators/producers and consumers/users for the purpose of both economic growth and social advancement”.

The definition speaks to the notion of “the mass”, engaging the whole of society in the production of - and use of - innovation. This understanding of inclusive innovation is particularly useful for thinking about innovation as the remit of rural populations, minority groups, and traditional business. Half of Viet Nam's working population is employed by SMEs, which have in recent years (especially since the launch of Project 844) been superseded by startups in the innovation discourse. 



Commenting on the existing understanding and engagement with inclusive innovation policy in Viet Nam, a government official from Bac Ninh province said:

“I was curious about the term inclusive innovation, which was new to me before the workshop. But I found out that it is not new, and it is happening here in Viet Nam. The only thing is that the [GOV] policy [framework] does not recognize it”.

This quote underscores the feeling that inclusive innovation - as lexicon - is relatively novel in Viet Nam.  Related to its novelty, current innovation policies only tangentially take grassroots and bottom-up innovation into account. The thrust of STI policymaking is designed for S&T enterprises and organizations, and strives to further R&D, without necessarily bringing more of society into these activities, or designating social missions that should be achieved through that R&D. (With that said, it is important to note that there are incentives in place, by the Ministry of Nature Resources and the Environment, for example, to encourage agricultural innovation and green technologies). Another question emerged in the workshop: how could these types of innovations be supported by governments both at the national and local levels? The concern about shared action across the levels of government came in addition to participants emphasizing the difficulty of coordinating innovation policy across Ministries, given that innovation remains the remit of the Ministry of Science and Technology, with some involvement from the MPI. How, practically speaking, would ministries responsible for Social Affairs, Natural Resources, and more be involved in innovation policy making? New ways of working would need to be established, to design a more inclusive policy agenda, across ministries and levels of government, so that more teams (and their budgets) could substantially contribute to innovation policy design and implementation.  

What Next?

To delve more into how policymaking can be conceived and implemented in a more inclusive way, we are organizing a second action-oriented session later this Spring. We will again gather high-level policymakers to discuss inclusive innovation, and how ministries can come together to advance these policy efforts. UNDP Viet Nam is committed to supporting the Government of Viet Nam in building a more coherent innovation policy-making context. We hope to help institutionalize inclusive innovation across the Government through a ‘portfolio of experiments’ approach beginning with the National Innovation Center and SEDP/SEDS.

In the Asia Pacific region, UNDP Bhutan and UNDP Philippines have also joined in helping to lead on inclusive innovation, thereby forming something of a regional learning network on inclusive innovation policy, which other UNDP Country Offices are encouraged to join. The final report on "Strategies for supporting inclusive innovation: insights from Southeast Asia" is now out with a call to action for collaboration from innovation ecosystems around Asia Pacific, to make our discussions on innovation truly inclusive, right from the bottom up. Our call to action? Let’s come together to advance Asia Pacific’s ability to lead inclusive innovation policy making, beyond simply having “Silicon Ambitions”, and instead towards a model of innovation promotion that makes the most of the IR4.0 for all of society.