| Summary: | The services sector has been a critical contributor to economic growth in Vietnam but its performance lags comparators The services sector has been the economy's largest sector for the past decade. Looking ahead, services could play a crucial role in supporting Vietnam to sustain productivity growth and achieve its ambition to become a high-income economy by 2045. However, the performance of Vietnam's services sector lags peer countries. Small scale of firms, restrictions to services trade, low technological adoption and few inter-sectoral linkages affect productivity. Based on the preliminary analysis presented in this report, the four broad policy directions can be identified. First, Vietnam could further reduce restrictions to services trade and foreign investment. Second, Vietnam should encourage further adoption of digital technologies within firms to spur innovation. Third, focus should be on strengthening workers skills especially basic digital skills and the capabilities of firms and managers. Lastly, Vietnam should leverage services to promote further growth of other sectors, especially manufacturing
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