The Organization for Economic Cooperation and Development (OECD) has forecast that it will take Vietnam 40 years to get out of the middle-income trap.
Accordingly, the Southeast Asian country can only raise the income level by 2058, according to a recent OECD report publicized at a conference held within the 2014 Asia Development Forum (ADF) in Hanoi last Friday.
Vietnam, and other Asian countries, may be trapped at the middle-income level for decades before they can make their way out, said OECD report at "Overcoming the middle income trap" conference.
Speaking at the event, Head of OECD Asia - Kensuke Tanake gave a forecast projecting the time it will take Asian economies to raise their income level and become developed ones.
In particular, Vietnam was categorized in the group spending the longest time to be at the next level, at 44 years, or by 2058, only a year before India.
Meanwhile, neighboring countries such as Malaysia are expected to exceed the average income in 2020, China in 2026 and Thailand in 2031.
Talking about the current state of development, the Minister of Planning and Investment - Bui Quang Vinh, said that Vietnam would always identify itself as a country with low average income.
This is the result of a long process of 30 years and the driving forces for previous development were nearly exhausted.
"Without finding an effective way to restructure the local economy, Vietnam will surely facing middle-income trap and slow growth," Minister Vinh asserted at the event.
The conference, the first held in Vietnam, discussed challenges countries reaching middle-income may face, which prevent them from raising the income level to a higher bar.
Getting old before getting rich?
If the OECD forecast turns out to be real, many people, including the readers of the article, will become old, or very old, before getting rich by then.
According to a calculation of the Vietnam General Statistics Office and United Nations Population Fund (UNFPA), Vietnam will move from the current golden demographic structure to an aging population with breakneck speed, only in 15 -20 years.
Specifically, in 2037, Vietnam’s population is predicted to officially begin it aging process, which means the proportion of people aged over 60 and older will account for 20 percent of the total population, or the proportion of people aged over 65 and older will account for 14 percent of the total population.
In fact, population aging is a common problem in many countries. It is also considered the main trends of the 21st century.
However, the problem lies in that an aging population currently appears mostly in developing countries, with a much higher per capita income.
The process happens at a very “breakneck speed” as the transition to the same stage in the developed world takes much longer, like France (115 years), Sweden (85 years), Australia and (73 years).
Professor Keun Lee from the Korean National University said at the conference that factors that can help the country escape the middle-income trap is human creativity and innovation.
He gave the example of South Korea, a country that has achieved a high level of income and continuous annual growth. However, Korea's success came in quite late. In the mid 1990s, this country is still in the process of constant trade deficit, lasting from ten years earlier.
By the end of the decade, the country began to achieve the first fruit of trade surplus. However, after a period of export promotion and economic openness, the Korean economy then achieved fast growth rate.
One of the secrets is to invest strongly in research and development (R&D), he said.
This area receives the response of the government such as tax exemption to encourage the opening of research labs. Thus, the Korean company has created a lot of high-tech products such as memory chips, mobile phones, digital TV.