Relocating efficient resources is a competitive advantage

Vietnam is entering a decisive phase of its development.

- By Nguyen Canh Cuong Expert lecturer, University of Economics and Business Vietnam National University, Hanoi

As global supply chains reorganise, foreign investors reassess risk, and industrial policy returns worldwide, the country's longterm competitiveness will depend less on cost advantages and more on how efficiently resources are allocated within the economy.For three decades, Vietnam's growth model delivered results through integration, labour absorption, and scale. That model is not exhausted, but it is no longer sufficient. The core challenge ahead is not capital scarcity, but allocation; not labour quantity, but productivity. At the centre of this transition lies a familiar yet often overlooked concept: deadweight loss.

The global environment that once rewarded export-led expansion has changed. Trade policy has be-

come more discretionary, industrial subsidies more common, and geopolitical considerations increasingly embedded in investment decisions. According to recent Asian Development Bank (ADB) analysis, discriminatory trade and industrial policy measures have surged since 2019, led by advanced economies responding to supply chain risks, climate policy, and strategic competition.

For Vietnam, this fragmentation raises the cost of inefficiency. When capital, labour, or land remain trapped in low-productivity uses, the economy forgoes output that could otherwise be realised. In a more protectionist and competitive global system, those forgone gains translate directly into weaker resilience and reduced appeal to high-quality investors. Resource misallocation is often framed as a technical macroeconomic problem. In reality, it is a frontline investment issue.