Evaluating the impact of Innovation on Provincial economic development in Vietnam: Utilizing the Provincial Innovation index (PII)

Abstract

In the new development context of Vietnam, innovation is affirmed as one of the four main pillars for economic development. Several orientations, guidelines and policies have been issued to promote extensive innovation development, especially at the provincial and enterprise levels. This article attempts to quantify and evaluate the impact of innovation on provincial economic development (proxied by economic size and productivity) by specifying and testing different econometric models, using cross-sectional data on socio-economic development in 2023, at the provincial level in Vietnam. The research results show that improving innovation performance has a positive impact on economic growth and labor productivity. Some additional empirical evidence on the role of some other factors in provincial economic development are also provided. This research pioneers in utilizing the provincial innovation index (PII) published by the Ministry of Science and Technology in 2023 and contributes to clarifying the understanding and awareness of the relationship between innovation and economic development, thus providing practical reference information for future development planning. Hopefully, the article will inspire wider participation in research on innovation in Vietnam in the future.