In 2009, Vietnam officially surpassed the low-income threshold and joined the group of middle-income countries (ranging from $1,000 to $10,000 per capita per year). This raises an important question: When will Vietnam be able to achieve the status of a high-income nation?
To realize this goal, a concerted and determined effort is required from individuals, organizations, and leadership at all levels of society. This is not just an economic challenge but also a strategic issue that demands a shift in mindset, work ethic, and the speed at which aspirations are translated into action.
Among 170 countries worldwide, only 47 nations (27%) have reached an average per capita income of over $10,000 per year. Meanwhile, 87 countries (more than 50%) remain in the middle-income group, and the remaining 21% fall into the low-income category, earning less than $1,000 per year. This demonstrates that increasing national income is not a simple task; it requires a sustainable development strategy and strong determination from society as a whole.
In 1975, economies with abundant oil reserves, such as the United Arab Emirates, Qatar, and Kuwait, led the group of high-income nations. However, today, natural resources alone are no longer a guarantee of economic status. A resource-rich country like Malaysia, despite more than 30 years of development, has yet to escape the middle-income trap. Meanwhile, nations such as the Czech Republic, Poland, Hungary, and Slovakia have taken less than 15 years to surpass Malaysia and join the ranks of high-income economies (Table 1).
The key determining factor is human capital and knowledge. The development of a nation no longer depends solely on natural resources but on access to information, social awareness, organizational efficiency, discipline, cooperation, and innovation. These elements form the solid foundation that enables a country to break through and maintain its standing in the global economy.
Over the past two centuries, neoclassical economics has recognized two fundamental factors in production: labor and capital (including natural resources). In this model, knowledge, labor productivity, education levels, and intellectual capital were considered external factors, existing outside the production system. However, this approach fails to fully explain the sustainable and long-term growth of certain economies. As a result, economists have revised the neoclassical model to acknowledge technology and knowledge as essential components of the modern economic system.
Today, knowledge—the foundation of technology—has become the third production factor in advanced economies. When discussing high technology, it is not merely about applying technology but also about developing knowledge systems, which play a decisive role in global competition. This explains why many countries, despite having abundant resources and a large, low-cost labor force, have failed to become wealthy economies.
In the world’s leading economies, the balance between knowledge and resources has shifted overwhelmingly in favor of knowledge. This factor has become the primary driver of quality of life, surpassing land, production tools, and labor. In the context of globalization, knowledge is the most important form of capital, and economic growth is driven by the accumulation of intellectual capital. Notably, technology and innovation not only create temporary breakthroughs but also establish the technical foundation for future innovations, contributing to a sustainable economic development model.
Intellectual property (IP) profits play a crucial role in encouraging businesses to invest in research and technological development. Therefore, a strong and effective legal system is essential to protect long-term interests, promote innovation, and ensure the sustainable growth of the knowledge economy.
Technology does not merely create breakthroughs in production; it also accelerates investment return cycles, explaining why developed nations can maintain sustainable growth rates. Conversely, many developing economies, despite having abundant labor and capital, have yet to achieve similar growth. Modern growth theories suggest that when knowledge becomes the foundation of technology, returns on technology investment are not only sustained but tend to increase over time.
To attract investment in technology, a country must build human capital, developed through formal education, professional training, and skill enhancement in the workforce. This is part of the economic restructuring process, gradually transitioning from a labor-intensive model to a knowledge-based economy.
What is a Knowledge Economy?
According to the British Chamber of Commerce (1998), a knowledge economy is one in which knowledge is the most important tool for wealth creation. In the industrial sector, wealth is generated by increasing the use of machinery and technology to replace manual labor. Many people associate the knowledge economy with high-tech industries such as information technology, telecommunications, and financial services.
The Human Resource Challenge for the Knowledge Economy
The key challenge for developing countries is: How can they build a skilled and knowledgeable workforce? Several successful nations have adopted different strategies:
Thanks to these strategies, these nations have achieved remarkable success. Within just 20 years of gaining independence, Singapore, a resource-scarce island, attained a per capita income exceeding $10,000 per year.
Knowledge: The Defining Factor of the Knowledge Economy
Unlike capital and labor, knowledge is a type of public good. Once discovered, knowledge can be widely used without diminishing its value. However, this also presents a challenge: inventors often struggle to prevent others from using their knowledge. Despite intellectual property protections such as trade secrets, patents, copyrights, and trademarks, these mechanisms offer only limited safeguards.
Knowledge comes in various forms, categorized as follows:
Notably, the vast intellectual workforce of overseas Vietnamese holds enormous potential for contributing to Vietnam’s knowledge economy. However, this potential remains largely untapped due to a lack of effective mechanisms to attract and integrate these resources into national development.
Education and Innovation: Keys to the Knowledge Economy
In the knowledge economy, the only path to prosperity is to prioritize education and innovation. Knowledge can be acquired through formal education, but "tacit knowledge"—practical wisdom gained from real-world experience—is equally critical. Successfully integrating systematic and practical knowledge is the key to a successful transition to a knowledge economy and achieving long-term prosperity.
Absorptive Capacity: The Key to Thriving in the Knowledge Economy
A nation’s success in leveraging the knowledge economy depends on how quickly it transitions into an "absorptive economy." Absorption here refers not only to adopting modern technology but also to harnessing existing knowledge for international trade, innovation, efficiency, and avoiding redundant efforts. In such an economy, the wealth of individuals, businesses, and nations is directly proportional to their ability to absorb and share creative knowledge.
In this context, formal education systems must shift away from traditional information delivery methods and instead focus on teaching effective knowledge acquisition. Moreover, foreign language education must be emphasized as a crucial tool for absorbing and exchanging global knowledge.
Conclusion
To thrive in the knowledge economy, there is no alternative but to develop the ability to absorb global knowledge, promote practical education, and invest in tacit knowledge. Nations, businesses, and individuals that embrace this shift will be the pioneers of the 21st century.
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