Endogenous Knowledge and Soft Power – The Key to Escaping the Income Trap

Speaking at the IGNITE Seminar on August 13, 2025, Assoc. Prof. Dr. Nguyen Ai Viet – Director of the IGNITE Institute emphasized that Vietnam has a critical window of just 12.5 years to escape the middle-income trap, contingent on achieving a 10% annual growth rate. He stated that the breakthrough solution requires building endogenous technological capacity and elevating national soft power, rather than depending on the old growth model.

The Middle-Income Trap – An Inevitable Challenge 

Vietnam faces the risk of remaining entrapped in the middle-income bracket for over 20 years, with a current GDP per capita of $4,300. The target to escape this trap requires reaching $13,845 per capita; however, the growth model based on low-cost labor and resource extraction has reached its limit. 

According to analysis by the IGNITE Institute, the primary barriers are reliance on foreign technology and unfocused investment in Research and Development (R&D). Current R&D expenditure stands at only 0.04% of GDP—significantly lower than the minimum 2% threshold required to generate a breakthrough. A similar situation applies to higher education, where investment is merely one-sixth of the OECD average.

Soft Power: The Intangible Foundation Determining Success 

Distinct from traditional hard power, soft power is defined by five pillars: institutional value systems, a culture of innovation, multilateral diplomacy, advanced technology education, and national branding. “This serves as the launchpad for all technology development efforts. Without soft power, Vietnam will struggle to attract high-quality investment and global talent,” the IGNITE report asserts.

The breakthrough roadmap proposed by the Institute follows a specific chain of drivers: Soft Power leads to Endogenous Technological Capacity, generating Technological Innovation, forming Endogenous Industry, and ultimately achieving double-digit growth. Lessons from Japan, South Korea, and Singapore demonstrate that these nations succeeded by mastering technology rather than merely importing it, building endogenous pillar industries, and heavily reinvesting in R&D.

Strategic Solutions from IGNITE Institute

To realize these goals, the Institute proposes five key solutions:

1. Increase R&D investment by 50-fold: Reaching 2% of GDP, with enterprises contributing 80%.
2. Revolutionize higher education: Aligning training with R&D needs and attracting global professors.
3. Breakthrough institutional reform: Removing barriers such as Decree 55 and building a "State – Science – Enterprise" partnership model.
4. Develop elite human resources: Prioritizing the employment of chief engineers for key sectors.
5. Implement the "Five-Plus-One" system: Public Welfare – Endogenous Industry – Effective Governance – Data Infrastructure – Innovation Ecosystem, plus Action-Oriented Leadership.

Vietnam stands before a historic opportunity for a breakthrough. Success requires long-term vision, political determination, and strategic investment in endogenous knowledge. This is not solely the Government's task but requires the collective effort of the entire society. Soft power and endogenous capacity are the keys to unlocking a prosperous future for the nation.