The Role of institutions and innovation in sustainable development in Vietnam
Keywords:
culture tower, economic growth, innovation, institutions, sustainable development, VietnamAbstract
According to the resolutions of the Central Committee and the 13th National Congress of the Communist Party of Vietnam, the country aspires to become an upper-middle-income economy by 2030 and a high-income developed nation by 2045. More importantly, Vietnam has committed to a sustainable development path - one that does not sacrifice environmental protection or social welfare for economic growth at any cost - by pursuing a distinctive socialist-oriented market economy. To deepen the understanding of possible pathways and solutions for achieving these goals, this study aims to identify the key factors influencing sustainable development in Vietnam, focusing on five core pillars: per capita income, foreign direct investment (FDI), environmental quality, poverty rate, and innovation, during the period 2020-2023. Employing a structural modelling approach and panel data from all 63 provinces and cities (prior to the merger) updated through 2023, the study finds that institutional quality and innovation play a pivotal role in driving sustainable development. More specifically, human capital emerges as a critical factor that fosters innovation, attracts FDI inflows, and raises income levels. Meanwhile, effective anti-corruption efforts contribute significantly to poverty reduction and improved environmental governance. Furthermore, investments in environmental protection and digital transformation have shown positive effects on sustainable development. The findings provide important policy implications, highlighting the need to enhance policy quality, improve institutional frameworks, and promote innovation as key drivers of sustainable development in Vietnam in the new era.
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