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Investment as a Driver of Economic Growth: Asian Experiences and Policy Implications for Vietnam

• Pursuing high economic growth through robust investment, alongside factors that enhance total factor productivity (TFP), such as scientific and technological advancement and innovation, represents a common strategy adopted by many developing countries to transition toward developed-nation status and high-income levels.
• South Korea and Taiwan—two of Asia's "Tiger" economies—successfully implemented this growth strategy by directing credit flows toward priority sectors, combined with substantial policy incentives. This approach enabled rapid economic transformation over three decades (1970–1990), a period that coincided with their demographic dividends.
• Excessive reliance on investment-led growth, however, can give rise to structural risks, including over-leverage and diminishing investment efficiency. Such imbalances may lead to asset bubbles and deflationary pressures, as observed in the case of China.
• The effective allocation and prudent management of investment resources—in particular credit—toward priority areas such as manufacturing, processing industries, high technology, and education, supported by stronger incentives and binding conditions, constitute the appropriate policy direction for Vietnam. This is especially urgent given that Vietnam's demographic "golden period" is projected to last only another 10–15 years, and the country's stated objective is to escape the middle-income trap by 2050.