Communist Review – Properly defining and addressing the roles of the State and the market in promoting science, technology and innovation is one of the essential tasks at present in order to contribute to creating breakthrough development in these fields. Đoing so helps strengthen national scientific and technological capacity, link scientific research with production and business practices, and create momentum for the country’s rapid and sustainable development in the new era.

Characteristics of science and technology resources

A nation’s science and technology resources constitute its scientific and technological capacity, which originates and develops from within the country itself. Such capacity is determined by the nation and formed through its proactive efforts to identify appropriate approaches to develop and utilise in accordance with its development needs.

A nation’s science and technology resources include a number of elements, including: the scientific and technological workforce and its capacity for creativity and knowledge generation; investment in science and technology; the system of scientific and technological research organisations; the number of scientific publications and inventions and patents; the value and technology level of machinery and equipment available in the country; and the scientific and technological information system.

In addition to these factors, a nation’s science and technology resources are also reflected in its ability and capacity to identify needs, select priority objectives for science and technology development, and effectively serve development goals; formulate strategies, policies and plans for science and technology development; and apply and implement appropriate management mechanisms, policies, financial instruments, human resources and physical infrastructure in order to achieve the established priority objectives for science and technology development. They are further reflected in the ability to acquire scientific knowledge, select appropriate technologies (both domestically and internationally), apply science and technology to socio-economic development, commercialise scientific and technological research outcomes, and proactively conduct scientific research and technological development aligned with national development objectives.

Thus, science and technology resources differ fundamentally from other types of resource, as reflected in the following characteristics:

First, science and technology resources are unique because of the specific nature of science and technology, particularly scientific and technological products. Scientific and technological products form a unique category of assets that embodies new knowledge and represents the outcome of creative activities and scientific and technological research. They are protected under regimes governing copyright, rights relating to inventions, patents, industrial designs, utility solutions, and other forms of intellectual property.

Second, the smooth and efficient allocation of science and technology resources requires the effective enforcement of intellectual property rights. These rights are recognised by the State and grant rights holders exclusive control over innovations and knowledge for a specified period in order to prevent unlawful exploitation. Only when intellectual property rights are guaranteed will stakeholders involved in promoting science and technology development, particularly those in the private sector, be willing to invest confidently in innovation and technology development.

Third, the development of science and technology and the use of scientific and technological products in the market not only generate direct benefits for market participants but also create broader benefits for the economy and society as a whole through technological innovation, improvements in overall labour productivity, employment creation, and the maintenance of economic growth.

Fourth, information relating to science and technology is often difficult to measure and evaluate. This stems from the complexity and intangible nature of scientific and technological products. Incomplete and asymmetric information frequently gives rise to high transaction costs.

These characteristics indicate that, without the role of the State, science and technology resources would lack stability, fail to realise their full potential and, in particular, be unable to attract private-sector investment for their development. However, if the State intervenes inappropriately or fails to comply with objective laws, distortions and inefficiencies may arise in the allocation and utilisation of science and technology resources, leading especially to the waste of public investment resources. Therefore, the key issue is how to understand and resolve the roles of the State and the market, as well as the relationship between them, so as to ensure the optimal allocation of science and technology resources.

Limitations in defining the roles of the State and market in promoting science, technology and innovation in Vietnam

In practice, science and technology resources in Vietnam have gradually been improved; however, overall shortcomings and limitations remain. According to Resolution No. 57-NQ/TW, issued by the Politburo on December 22, 2024, on “Breakthroughs in the development of science, technology, innovation and national digital transformation”, the pace and breakthroughs in the development of science, technology, innovation and national digital transformation remain slow. This is reflected in several aspects, including the fact that scientific research, technological application and innovation have yet to achieve major breakthroughs, while strategic and core technologies have not yet been mastered. The numbers of science and technology products and science and technology enterprises remain small relative to the economy’s development requirements in the context of international integration. The research capacity of scientific and technological organisations still lags behind that of developed countries in the region and the world. Enterprises’ demand for technological innovation remains limited. The science and technology market has not developed in a coordinated manner, particularly as mechanisms and policies that provide enabling conditions and a legal foundation for the allocation of science and technology resources remain inadequate and insufficiently aligned with practical realities.

The above limitations stem from both subjective and objective causes. Among them, shortcomings in the understanding of the role, functions and intervention of the State, as well as deficiencies in both the perception and practical handling of the relationship between the State and the market in the allocation of science and technology resources, have not been properly or effectively addressed, as reflected in the following:

First, the mechanism governing state budget investment in science and technology remains limited. Public investment in science and technology continues to be dispersed and insufficiently focused, while still being influenced by an administrative mindset, resulting in low efficiency in the use of resources.

Second, the business environment has not created sufficient incentives for enterprises to invest in technological innovation and has yet to become genuinely healthy and equitable. As a result, many enterprises continue to rely on State support, showing limited interest in and facing insufficient competitive pressure to apply research outcomes to technological innovation. Mechanisms for supporting enterprise technological innovation through the state budget still contain many shortcomings, failing to ensure the effective use of support funds and to provide a solid foundation for the development of innovation-oriented enterprises. Although several funds have been established to support enterprises’ investment in technological innovation, in practice they have not yet achieved their intended impact.

Third, State mechanisms and policies relating to enterprises and technology continue to face obstacles. Researchers still encounter difficulties in establishing or cooperating with scientific and technological organisations, as well as in accessing enterprises’ funding for scientific research, technology development and innovation. Challenges also remain regarding expenditures on scientific research, technology development and innovation, and the commercialisation of research outcomes.

Fourth, the State’s management mechanism for public scientific and technological organisations remains inadequate, while the shift of these organisations to operate under the enterprise-style mechanism has proceeded slowly. The State’s funding allocation mechanism for public scientific and technological organisations continues to be largely “egalitarian” in nature. A reluctance to innovate and assume responsibility, together with a persistent dependence on State subsidies, remains evident in many public science and technological organisations. This has led to slow reform of management mechanisms and policies for scientific and technological personnel, thereby failing to encourage initiative and creativity among researchers and resulting in the fragmentation of research capacity.

Fifth, the organisational structure of state management over science and technology has not yet become truly streamlined, effective and efficient. A highly professional contingent of officials and civil servants capable of effectively managing the allocation of science and technology resources has not yet been established.

Enhancing the role of the State in the State-market relationship to promote science, technology and innovation in Vietnam

First, the State should play a facilitating role by laying foundations and creating a favourable environment for the development of science and technology in Vietnam.

It is necessary to develop and improve the legal framework governing science and technology development, including legislation on technology transfer, intellectual property, technology contracts and related areas. This institutional and legal framework is a prerequisite and must be put in place in advance, comprehensively and with effective enforcement mechanisms. A key requirement is the establishment of clear and specific rights associated with various types of scientific and technological products, as well as the effective protection of property rights and intellectual property rights.

The State should formulate development strategies, plans and schemes for science and technology resources in each period. It should also improve the business environment to ensure healthy and fair competition among participants in the science and technology market, thereby encouraging enterprises to focus on investment in innovation, technology development and the enhancement of their competitiveness, rather than devoting excessive resources to overcoming obstacles in the business environment.

In addition, the State should ensure the development of a modern and comprehensive socio-economic infrastructure system to support science and technology development, including telecommunications systems, office facilities and transaction centres. It should also organise the provision of public services for science and technology development, such as intellectual property registration services, market information services and technology assessment services.

Second, the State should directly manage the allocation of science and technology resources through policy instruments and regulatory measures.

Science and technology resources comprise components whose formation and development require direct State involvement through regulatory instruments. These components often provide the foundation for science and technology development. Although non-state actors may participate in these areas and investment from non-state sources should be encouraged, their development has not yet kept pace with other sectors.

The State should invest in basic research, research serving socio-economic development needs and high-risk technological fields. It should also directly invest in the development of high-quality human resources and knowledge-generating activities. These areas are often less profitable and therefore attract limited private-sector participation; yet they play a fundamental role in advancing national science and technology and generating positive spillover effects. The State should take the lead in establishing mechanisms that allow competent authorities to authorise organisations and enterprises to conduct pilot testing of new technologies, processes, solutions, products, services and business models that are either not yet regulated by law or differ from existing legal provisions, within clearly defined limits regarding scope, duration and location. For applied technologies and market-oriented technologies with strong commercialisation potential, mechanisms should be developed to encourage private-sector participation or combine State and private-sector involvement through partnerships and public-private partnership (PPP) arrangements.

The State should directly establish and manage certain entities that play an important role in developing the foundations of science and technology development. It should develop infrastructure, particularly digital infrastructure and digital technologies, as well as data systems and large-scale databases. Priority should be given to building a number of key scientific and technological organisations that meet international standards and play the pioneering role in international integration. The State should invest in and establish support systems for innovative enterprises and technology adoption in order to assist companies with strong growth potential. It should also invest in and develop intermediary and brokerage organisations on the science and technology market, such as international-integration consultancy service organisations and technology transfer consultancy and brokerage agencies in certain sectors such as agriculture.

Third, the State should reform management mechanisms and methods in order to enhance the effectiveness and efficiency of governance over the allocation of science and technology resources.

In the fields of science and technology and technology contracts, various organisations and institutions have already been established; however, many continue to face shortcomings in capacity or have achieved limited results. Examples include the mechanisms governing state budget investment and management for science and technology. In addressing these issues, the State should reform intervention mechanisms and management approaches to improve effectiveness and efficiency, including the following measures:

(i) Reform the State’s investment mechanism for science and technology development by allocating and disbursing state budget funds in a manner that encourages breakthroughs and innovation and is responsive to practical needs. Scientific and technological projects financed by the state budget should be evaluated and managed based on outputs, while ensuring adequate resources are provided in accordance with assigned tasks and funding commitments. State subsidies for certain applied research activities should gradually be phased out. Greater financial autonomy should be granted to scientific and technological organisations, and these organisations should be encouraged to operate under enterprise-style models and become financially self-sustaining.

(ii) Review the operational model of public scientific and technological organisations, including their transformation into enterprise-based entities and the reform of management mechanisms governing such organisations. To facilitate this transition, it is necessary to clearly define ownership rights over protection titles, patents and inventions held by public scientific and technological institutions when they are converted into enterprises; clarify and safeguard the legitimate interests of scientists; examine models for State ownership representatives in science and technology enterprises following conversion; and improve and simplify administrative procedures associated with the transition process.

(iii) Reform the management mechanism for scientific and technological personnel in public scientific and technological organisations in a manner that promotes creativity, autonomy and accountability. Human resource management should be shifted from an administrative model to an output-based management model. At the same time, a professional and modern working environment should be created for scientists, and a culture of research and innovation should be fostered within scientific and technological organisations.

Issues for further consideration

First, it is necessary to continue theoretical research and review, and to renew thinking in order to achieve a deeper and more comprehensive understanding of the relationship between the State and the market in the allocation of science and technology resources in Vietnam. This will help enhance the State’s capacity to formulate and implement policy instruments and management measures, enabling it to play a leading role in guiding, promoting and creating the most favourable conditions for the development of science, technology, innovation and national digital transformation. It is also important to study and learn from successful models and experiences of other countries and to conduct regular reviews in order to make practical adjustments.

At the same time, opinions and recommendations from agencies, organisations and individuals involved in the allocation of science and technology resources should be regularly collected, particularly regarding the definition of the State’s role and functions in policy formulation and the implementation of legal frameworks related to the allocation of science and technology resources. Such participation helps ensure that the relationship between the State and the market is addressed in a manner more closely aligned with practical realities and reduces existing shortcomings.

Second, the State should continue to improve and enhance the effectiveness of science and technology governance in a streamlined and professional manner so as to regulate and intervene appropriately and effectively in the allocation of science and technology resources. It is necessary to continue modernising the operations of state management agencies and law enforcement bodies at both central and local levels that are involved in the allocation of science and technology resources, thereby ensuring the effective achievement of established objectives. The quality of personnel should also be improved, particularly among leaders, managers, technical specialists and policy-makers engaged in matters relating to science and technology resource allocation.

Research should be undertaken to further refine the organisational structure and operational mechanisms of state management agencies and law enforcement bodies associated with science and technology resource allocation in a streamlined, integrated and interconnected manner. Overlapping functions and responsibilities among relevant organisations and units, from the central to the local level, should be eliminated. Greater decentralisation should be implemented among ministries, sectors and localities, granting additional authority to local governments under clearly defined regulations and objective performance indicators relating to science and technology governance.

The allocation of state budget resources for science and technology, particularly funding for scientific research and technology development, should be reformed, with priority given to the funding mechanism administered through science and technology development funds. State budget expenditure for science and technology activities should be restructured to ensure concentration on key priorities and avoid thinned-out and duplicate expenditure. Mechanisms should be introduced to encourage public procurement of products and goods resulting from scientific research conducted by domestic enterprises. Special mechanisms should also be established for the research and development of selected strategic technologies. Furthermore, public-private partnership mechanisms and policies should be adopted to support the research and development of strategic technologies.

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* Dr. Nguyen Manh Hung, Central Theoretical Council of the Communist Party of Vietnam

** Dr. Le Thi Hong Diep, University of Economics and Business, Vietnam National University, Hanoi