With the given Vietnam's low degree of economic development and limited ability to amass capital outside of domestic capital, official development assistance ODA has laid the groundwork
Reason for choosing topic
Vietnam is increasingly joining the global economy, reflecting an international integration trend that no country can avoid This integration enables Vietnam to access support from wealthier nations, creating new opportunities for growth and collaboration.
Official development assistance (ODA) plays a vital role in advancing a country's socio-economic growth by supporting key areas such as transportation infrastructure, poverty alleviation, hunger eradication, industrialization, and modernization The positive impact of ODA is evident in the significant progress made across these sectors, contributing to national development and improved quality of life for citizens.
In recent years, ODA capital has played a significant role across multiple industries, actively supporting Vietnam's economic development ODA funding has contributed to the rehabilitation and construction of key infrastructure projects, driving improvements in social indicators and generating employment opportunities This has led to notable progress in poverty reduction and overall societal advancement throughout the country.
Since 1993, ODA has influenced Vietnam's economic development, but has faced challenges such as inefficient use of recruited capital Addressing these weaknesses is vital for shaping clear development strategies, guiding stakeholders toward shared economic objectives, and minimizing waste and misuse of aid Strengthening the management and allocation of aid resources is essential for Vietnam to remain competitive and adaptive in the fast-moving global economy.
My senior thesis examines the effects of Official Development Assistance (ODA) on Vietnam's economic growth from 1993 to 2020, analyzing both the achievements and ongoing challenges in attracting and utilizing ODA funds Through a detailed assessment of Vietnam's ODA management, the study provides a comprehensive overview of how these funds have influenced the country’s development, while offering strategic recommendations for enhancing the effectiveness of ODA utilization in the future.
Research scope
This thesis explores the impact of Official Development Assistance (ODA) on Vietnam's economic growth from 1993 to 2020, analyzing how ODA funds have contributed to key development areas, promoted GDP growth, and supported poverty reduction initiatives By examining data and trends over nearly three decades, the research evaluates the effectiveness of ODA in driving sustainable economic progress and highlights the significant role of international aid in shaping Vietnam’s transition into a globally competitive economy.
How effective are the activities of attracting and using ODA capital in Vietnam?
What is capital optimization strategy planning? Purpose and role of strategic planning Model/content of Vietnam's strategic planning activities to attract and use ODA?
The successes, limitations and causes of difficulties in the process of strategic planning to optimize aid sources for the country?
The most feasible solutions and proposals for planning development strategies to attract and use ODA for the country?
Research goals and tasks
The overall goal of the study is to analyze and propose solutions to positively
"The impact of ODA on Vietnam's economic growth"
On the basis of the general goals that have been established for the above research thesis, in more detail, the topic is researched to solve 3 specific goals:
1 Systematize the theoretical basis for the deployment of ODA in Vietnam and internationally
2 Research and analyze the current situation of attracting and using aid sources in Vietnam in the period 1993-2020
3 Proposing, perfecting the implementation of the development strategy and optimizing the use of aid resources in Vietnam.
Research Methods
The topic identifies and analyzes research questions using the knowledge of the world monetary theory module
Methods of investigation: Secondary data, such as studies on the state of attracting and utilising ODA in Vietnam, are combined with Vietnamese decrees and economic strategies to provide answers
This thesis relies on secondary data sourced both within and beyond the Vietnamese market, drawing from references that detail the establishment, growth, and present dynamics of ODA capital in Vietnam It incorporates information from policy reference books, economic legislation, recent articles on Vietnam’s economic status and development, and analyses from various economic and government websites These resources were used to assess and forecast trends in attracting and utilizing ODA funds, offering a comprehensive overview of Vietnam’s approach to soliciting and managing external aid.
The research paper utilizes questionnaires to gather primary data directly from students at the academy, focusing on the current state of attraction toward gifts from Vietnam and their usage in recent years This approach provides valuable insights into trends and preferences, supporting in-depth analysis of gift-related behaviors and attitudes within the Vietnamese context.
Observation and data collection methods: Directly follow news items and reports from official forums
Expert interviews serve as the main source of data for this study, which is analyzed through qualitative methods The approach integrates innovative thinking, logical systems, and the frameworks of dialectical and historical materialism, supplemented by statistical analysis This comprehensive methodology enables a deeper understanding of the findings and situates them within a wider academic and practical context.
Theme structure
In addition to the introduction, table of contents, list of tables, figures, acronyms, appendices and conclusion, the thesis consists of 3 main chapters:
Chapter 1: Theoretical basis of official development assistance
Chapter 2: The situation of ODA attraction and use and its impacts on the Vietnamese economy
Chapter 3 Solutions to improve the efficiency of capital use in Vietnam.
THEORETICAL BASIS OF OFFICIAL DEVELOPMENT
Overview of ODA capital
1.1.1 The definition of ODA capital
Throughout the evolution of the international economy, perspectives on Official Development Assistance (ODA) have varied widely Initially, ODA was regarded primarily as financial support from wealthy nations to developing and poorer countries, functioning as a crucial tool for budgetary assistance and economic development.
ODA is often considered a form of free support, but with increasing economic internationalization and globalization, its role has evolved Today, ODA is viewed as a collaborative development effort involving developed and developing countries, alongside international organizations, aimed at fostering economic growth and global cooperation.
Official Development Assistance (ODA) refers to grants and concessional loans provided by governments, international organizations, and NGOs to developing and least-developed countries, aimed at supporting economic and social progress This form of capital transfer includes currency, technology, and financial resources originating from industrialized nations, major international financial institutions like the World Bank, IMF, and ADB, as well as United Nations agencies and non-governmental donors In Vietnam, ODA is defined as development cooperation between the Vietnamese government and foreign governments, intergovernmental organizations, and NGOs, facilitating growth and reducing poverty in recipient countries through strategic international partnerships.
Official Development Assistance (ODA) originated after World War II with the US Marshall Plan, aimed at rebuilding Western European economies The concept of development cooperation was first articulated at the 1955 Colombian Conference, paving the way for the establishment of the donor community In 1960, the Organization for Economic Cooperation and Development (OECD) was founded, followed by the Development Assistance Committee (DAC) in 1961, both designed to coordinate international development aid In 1972, the OECD formally defined ODA as financial transactions intended to promote the socio-economic development of underdeveloped countries, specifying that grants must comprise at least 25% of the aid provided Fundamentally, ODA involves the transfer of national resources from developed to developing nations Furthermore, in 1961, the United Nations General Assembly urged wealthy nations to contribute 1% of their gross national product to support poor countries in achieving sustainable socioeconomic progress.
The amount of ODA granted to developing nations will be adjusted annually based on the economic development results of the world's major donor countries
Donor countries direct Official Development Assistance (ODA) toward diverse priorities such as social and administrative infrastructure, economic development, production support, debt relief, and emergency and food aid ODA primarily supports essential projects like roads, transportation, irrigation, hospitals, schools, water supply systems, and environmental sanitation, which play a crucial role in socioeconomic recovery and development These initiatives often lack profitability or sufficient financial returns to attract private investment, reinforcing the importance of international aid in sustaining and improving vital infrastructure that benefits communities.
ODA funding plays a crucial role in advancing public-benefit programs and supporting technical infrastructure development, helping to attract private investment When integrated with an open-door foreign policy and the transition to a market economy, the Party and State’s approach of expanding international cooperation and leveraging global support has driven significant and dynamic socio-economic progress.
1.1.3 The characteristics of ODA capital
ODA is non-refundable aid, refundable aid or concessional credit Therefore,
ODA has the following main characteristics:
ODA capital offers preferential terms such as extended repayment periods and long grace periods—often, for example, 40-year repayment and 10-year grace periods from institutions like the World Bank, ADB, or JBIC Unlike commercial loans, ODA often includes grant aid components, making it more advantageous for recipient countries The donor component depends on factors such as repayment terms and the comparison between aid interest rates and commercial credit rates ODA is specifically designed for developing and underdeveloped nations to support development objectives Recipient countries generally qualify for ODA based on low GDP per capita, which increases access to grants and low-interest financing, and by aligning their ODA usage with the grantor’s strategic priorities.
ODA donor countries typically set their own policies and prioritize specific sectors aligned with their interests or technical expertise These priorities and focus areas can shift over time, reflecting changes in the donor countries’ strategies and objectives.
Understanding the key trends and priorities of countries and organizations involved in Official Development Assistance (ODA) is essential for maximizing its impact ODA refers to the transfer—either refundable or non-refundable—of part of the gross national product from developed nations to developing ones, under specific conditions This type of aid is highly sensitive to social factors and heavily influenced by the public opinion of both the donor and recipient countries.
Official Development Assistance (ODA) often comes with binding conditions that affect both donor and recipient countries For instance, Japan requires its aid to be denominated in Japanese Yen, while countries like Belgium, Germany, and Denmark mandate that around 50% of their ODA be spent on goods and services from their own markets; Canada sets this figure at 65% On average, 22% of DAC aid must be allocated to donor-country products and services These restrictions reflect the dual purpose of ODA: alongside the aim to foster sustainable development and reduce poverty in developing nations, donor countries also seek to advance their political interests and economic advantages.
Developed countries recognize the advantages of assisting developing nations in opening up their product consumption and investment markets By providing aid, they create long-term economic relationships that result in mutual benefits, including enhanced security, economic growth, and political stability, as the economies of poorer countries expand.
ODA can become a source of debt for recipient countries, especially when inefficient use leads to unsustainable growth and difficulty repaying loans over time Although the preferential terms of ODA often obscure the initial debt burden, countries may eventually face a cycle of debt if these funds do not boost productive or export-oriented sectors Since ODA is typically not invested directly in areas that generate foreign currency through exports, managing ODA effectively requires strategic coordination with other capital sources to strengthen economic growth and improve export capacity.
1.1.4 The classification of ODA capital 1.1.4.1 Segmentation by source of capital
Grant aid is non-refundable financial support provided by donors for implementing ODA programs and projects, with funding amounts determined by agreements with foreign partners This type of aid is primarily allocated to key areas specified within these agreements.
Technical assistance for institutional development in Vietnam includes capacity building for local agencies, technology transfer through experts and volunteers, equipment provision, research support, and basic investigations such as overview reports, planning, and monitoring of investment projects through pre-feasibility and feasibility studies Additionally, support is provided to balance international payment of goods Concessional credit is available for project-based construction, equipment installation, or equipment supply, with project components potentially covering consulting services and staff training programs Program aid is also available, integrating multiple objectives within coordinated project sets.
ODA concessional loans, also referred to as concessional credits, are a type of development aid where at least 25% of the loan value is provided as a non-refundable component These loans typically come with preferential terms, and foreign donors may set specific conditions for recipients to access the funding.
The role of ODA in economic development
ODA brings advanced scientific and technological management techniques that help recipient countries boost their management capacity, integrate science and technology, and improve labor productivity and the quality of goods and services.
Programs and projects dedicated to social welfare, healthcare, education, hunger eradication, and poverty reduction play a key role in enhancing the quality of life, overall health, and educational attainment in ODA-receiving countries By directing investment capital into vital sectors and focusing support on underdeveloped regions, these initiatives strengthen economic competitiveness and accelerate the process by which less developed countries close the gap with more advanced nations.
Rana and Dowling (1990) provide empirical evidence using a model with two key equations: one for growth and one for savings Their analysis includes all relevant parameters, clearly demonstrating a bidirectional relationship between investment and economic growth This research supports the idea that increased investment not only drives economic growth but that growth itself further stimulates investment, highlighting the dynamic interaction between these two critical factors.
GR = a 0 + a 1 ODA + a 2 FPI + a 3 S + a 4 CX + a 5 CLF + u t a 3 > 0 a 4 > 0 a 5 > 0
S = a 6 + a 7 ODA + a 8 FPI + a 9 CX + a 10 GDPN + a 11 GR + v t a 9 > 0 a 10 > 0 a 11 > 0
In which, GR: GDP growth rate; ODA: official support capital (% of GDP);
This article analyzes the impact of foreign direct investment (FPI), domestic savings ratio (S), export ratio (CX), labor force growth rate (CLF), and GDP per capita (GDPN) on economic performance The model focuses on two endogenous variables—growth rate (GR) and domestic savings (S)—while considering five exogenous factors: foreign aid (AID), FPI, CX, CLF, and GDPN By examining these interconnected variables, the study highlights how both internal and external influences shape economic development, revealing key relationships relevant for policy formulation and investment strategies.
Rana and Dowling (1990) calculated the above model using data from 1965 to
A study from 1988 analyzing developing Asian nations found that raising the domestic savings rate by 1% (with Official Development Assistance contributing 0.47%) can result in a 0.80% increase in GDP Conversely, a 1% growth in GDP is linked to a subsequent rise in the savings rate by 0.05%.
1.2.1 ODA is an important source of additional capital for development investment
Official Development Assistance (ODA) offers developing countries access to long-term, low-interest financing, often spanning 10 to 30 years with annual interest rates between 0.25% and 2% By easing the strain on national budgets, ODA enables governments to prioritize critical projects such as building roads, improving energy and water systems, expanding irrigation, and developing educational infrastructure, with repayment terms that require only interest payments upfront and principal payment over an extended period.
Over the past 30 years, Official Development Assistance (ODA) has played a crucial role in driving economic growth in developing countries World Bank data shows that raising ODA to 1% of GDP can boost growth rates by 0.5% in nations with effective management practices.
1.2.2 Access to advanced scientific and technological achievements and human resource development (technology spill-over)
Through donor-supported aid that mandates the use of donor goods or services, host countries can access advanced manufacturing and management technologies Human resource development is a key donor focus due to its direct impact on economic growth, with training often provided both domestically and internationally Donors commonly invest in training state management officials to enhance governance and administrative capacity By prioritizing human resource investment, donor aid ensures sustained benefits throughout the development process.
Although donor countries are often reluctant to share advanced technology, significant technology transfer through ODA funding enhances the scientific and technological capabilities of developing nations These funds are commonly used to improve and modernize infrastructure, invest in education, and support specialized training programs, leading to higher quality and efficiency in human resources.
1.2.3 ODA is playing an important role in improving socio-economic indicators
ODA plays a crucial part in driving economic growth in developing countries, supporting faster progress, poverty reduction, and broader socioeconomic objectives Research shows that when ODA per capita rises by 1 percent in these nations, the poverty rate decreases by 2 percent; with effective management, raising aid to 1 percent of GDP can lead to a 1 percent drop in poverty and a 0.9 percent decline in infant mortality Increased aid boosts growth, helping to raise living standards and achieve development targets.
ODA funding drives socioeconomic development in regions and major cities by supporting improvements in health, hygiene, and access to clean water, while also advancing environmental protection Additionally, ODA contributes to rural infrastructure upgrades, agricultural progress, hunger relief, and poverty reduction.
Official development assistance (ODA) plays a crucial role in strengthening the economic foundations of developing countries, providing vital foreign currency and supporting a balanced international payment As these nations shift from state-controlled policies to fostering private sector growth, ODA funding offers the substantial capital required for this transition, helping governments address ongoing economic challenges and build a more resilient economy.
1.2.4 ODA helps contract other sources of international investment
ODA primarily supports the development of technical and social infrastructure in underdeveloped nations, sectors that require substantial capital but yield low profitability, which typically deters foreign direct investment However, channeling ODA into infrastructure projects helps recipient countries create a more attractive investment climate, giving them a strong advantage in drawing FDI and additional foreign aid In countries with effective economic management, each dollar of ODA invested can generate approximately two dollars of private investment This process also nurtures conditions that encourage domestic investors to focus on lucrative production and commercial opportunities.
ODA and FDI are closely connected, as adequate ODA helps developing countries improve their socioeconomic infrastructure, which in turn attracts more FDI and loan opportunities for business expansion Without enough ODA, these countries may not create a favorable environment for foreign investment Additionally, relying only on ODA without seeking FDI or credit capital can hinder rapid production and service growth, making it difficult to repay ODA loans and sustain long-term development.
Many studies have explored how Official Development Assistance (ODA) impacts economic growth in recipient countries International organizations such as the World Bank and United Nations designate nations eligible for ODA based on specific criteria, while the OECD’s Development Assistance Committee (DAC) provides an official list of qualifying countries and territories Developing nations—including upper-middle-income, lower-middle-income, and least-developed countries (LDCs)—are all recipients of ODA, which is designed to support financial development and foster economic progress.
International best practice
South Korea is widely recognized as a benchmark for effective international aid utilization Emerging from the devastation of the Korean War (1950-1953) as one of the world’s poorest countries, South Korea quickly transformed into the 13th largest economy globally and the fourth largest in Asia This rapid development was driven by the coordinated efforts of the government, the resilience of its people, and strategic international assistance through grants and low-interest loans.
The aid is mainly used for infrastructure construction programs such as the Seoul-Busan Expressway, Pohang Stationless Brewery and the Soyang River Dam
The Korea Institute for Science and Technology Development (KAIST), known as the MIT of Asia (Asian Institute of Technology), was also built from this international aid
Table 1 Official foreign support for Korea (Unit: billions of dollars at current prices)
Period Aid target Size and type of aid Main
US Army and newly formed Korean government
Emergency relief due to the influence of World War II and Japanese colonialism
It's all sponsored 0.7 Billion USD US/GARIOA/ECA
The Korean War (1950-53) and the Restoration
Emergency relief due to the effects of the Korean War Recovery and reconstruction after the North Korean War
US/ECA/FOA/ICA UN/CRIK/UNKRA
Economic growth based on industrialization
Combine funding and lending 6 Billion USD (1962-78)
Japan and US Multilateral Development Bank
Economic growth is based on stability, efficiency and balance
All are loans, especially OOA loans, except during the Asian Financial Crisis (1997) which saw mixed loans and financing 33
Multilateral Development Bank Japan and the United States
Korea has established a highly effective strategy for distinguishing the phases of Official Development Assistance (ODA) utilization, with each stage defined by specific objectives and varying capital allocation Initially, prior to 1959, Korea focused ODA funds on post-war relief and economic recovery In subsequent years, the country's ODA use shifted to supporting economic growth, driven by national priorities such as industrialization, stability, efficiency, and sustainable development.
Table 2 The ODA’s effectiveness in Korea's development period
ODA loans and credits (measured by annual change)
Non-refundable ODA (measured by annual change)
Commercial loans (measured by annual change)
Savings (measured by the previous year's change)
Economic growth (measured by the change in the previous year)
*Source: Lee, J.W.(2006) Effectiveness of ODA during Korea’s Development Era, Overseas Economy, Korea Eximbank
Table 3 Distribution of Korean grants (1945-1961)
Field Aid to Korea OECD/DAC
Between 2019 and 2023, increased aid to the infrastructure and manufacturing sectors delivered stronger GDP growth than support directed at social and government areas Specifically, a 1% rise in aid for infrastructure and manufacturing resulted in a 0.3% increase in GDP growth when the average aid-to-GDP ratio was 2.7% While Korea prioritizes boosting its manufacturing sector, many developing countries concentrate their efforts on governance and social development.
Korea resolved its financial debt from aid loans 22 years ago and transitioned from being an aid recipient to an aid provider This milestone is reflected in the establishment of the Economic Development Cooperation Fund (EDCF) In June 1987, the Korean government launched the Bilateral Loan Program, managed by the Export-Import Bank of Korea under the Ministry of Finance's oversight The EDCF marks Korea's first official effort to support developing countries in their industrialization and economic growth.
According to the "Law on the Korea International Cooperation Agency,"
Korea became an official assistance country on April 1, 1991, with the establishment of the Korea International Cooperation Agency (KOICA), following a law mandating the agency's creation to foster cooperation with developing nations and promote sustainable development KOICA's mission includes eradicating hunger, reducing poverty, and improving the quality of life in disadvantaged countries Even before KOICA, Korea had undertaken ODA projects, such as a key initiative in Seoul in 1963, allowing international students and professionals to train in Korea under its development plans Rapid economic growth raised global expectations for Korea’s role in international aid, leading to KOICA’s focus on human resource exchange programs, including training for public servants from partner countries, vocational education, and dispatching experts to share Korea's development experience KOICA also expanded initiatives into medical volunteer services, Taekwondo martial arts programs, and youth volunteering to further strengthen global collaboration.
South Korea, once the poorest nation in the world in 1950, overcame years of war and Japanese colonial rule with substantial international support, including $1.7 billion from the United States—half of its government budget at the time Transforming from an aid recipient to a donor, Korea joined the Organization for Economic Cooperation and Development (OECD) in 1996 and was removed from the list of aid recipients in 1999 Korea’s economic progress continued, becoming a developed nation in 2009 as a member of the OECD’s Development Assistance Committee (DAC) Currently, Korea ranks 15th among 29 DAC countries in Official Development Assistance (ODA) and leads in growth rate, with its ODA scale increasing an average of 11.9 percent annually within a decade of joining the DAC.
Korea’s effective use of Official Development Assistance (ODA) offers several valuable lessons for developing countries One key strategy is to tailor ODA usage according to each stage of national development, ensuring that funds are allocated to specific purposes at appropriate times Timely and well-managed disbursement prevents project delays and regulatory setbacks, reinforcing the importance of efficiency throughout the process Rather than relying excessively on ODA, countries should apply it judiciously, guided by well-defined strategies to avoid dependency—ODA can be both a vital resource and a potential trap if misused Prioritizing investments in infrastructure and manufacturing sectors lays a solid foundation for sustainable long-term growth, while spreading ODA too thin across many sectors can undermine progress and create additional obstacles.
THE SITUATION OF ODA ATTRACTION AND USE AND ITS
The overview of Vietnam's economic development and the influence of ODA
of ODA on that development
Over the past three decades, Vietnam has transformed from one of the world’s poorest nations into a lower middle-income country, driven by sweeping economic and political reforms since 1986 Between 2002 and 2018, GDP per capita surged 2.7 times, surpassing USD 2,700 in 2019, while more than 45 million people escaped poverty The national poverty rate plummeted from over 70% to under 6% at the $3.2 per day threshold (PPP), although ethnic minorities still represent 86% of those living in poverty Vietnam’s Human Capital Index currently stands at 0.69, reflecting substantial progress in health and education.
A baby born today in Vietnam is projected to be 69 percent more productive with adequate education and healthcare, according to the Human Capital Index This figure is below the average for East Asia-Pacific and middle-income countries Despite Vietnam’s Human Capital Index improving from 0.66 to 0.69 between 2010 and 2020, significant disparities remain across the nation, especially among ethnic minority groups.
As living standards have improved, so has health Between 1993 and 2017, the infant mortality rate fell from 32.6 to 16.7 percent (per 1,000 live births) Between
Between 1990 and 2016, life expectancy at birth rose significantly from 70.5 to 76.3 years, reflecting major improvements in public health Health insurance coverage reached 87 percent of the population, contributing to a health care coverage index of 73, which surpasses both regional and global averages This progress highlights enhanced access to medical services and better overall health outcomes for the population.
Despite improvements in infrastructure and basic service delivery over the past 30 years, Vietnam continues to face significant demographic challenges The sex ratio at birth remains high and is increasing, reaching 115 in 2018, which highlights ongoing sex discrimination Additionally, Vietnam's population is aging rapidly, with the number of people over 65 projected to grow 2.5 times by 2050.
By 2016, electricity usage for home lighting surged to 99 percent of the population, compared to just 14 percent in 1993 Rural access to clean water rose significantly, reaching 70 percent in 2016, whereas in 1993 only 17 percent had access In urban regions, more than 95 percent of residents benefit from clean water access.
Vietnam's infrastructure investment as a percentage of GDP has lagged behind other ASEAN countries in recent years, making it challenging to support the next phase of economic growth with modern infrastructure services As a result, the country currently ranks 89th out of 137 nations for infrastructure quality.
Although ODA capital represents just 4% of Vietnam’s GDP, it contributes an average of 15-17% to the state budget’s total investment capital, making it a vital resource in an environment where public funds for development remain constrained This significant share supports the urgent need to build socioeconomic infrastructure and serves as a catalyst for growth, enabling the country to carry out its 10-year development strategies and 5-year plans effectively.
ODA programs have driven progress in agriculture and rural development across Vietnam, transforming rural landscapes through initiatives like irrigation systems, rural transportation upgrades, clean water access, sanitation projects, and expanded electricity grids These infrastructure advancements have uplifted living standards in remote and isolated communities Ethnic minority groups play a crucial role in reducing poverty by enhancing access to essential public services in health and education for rural populations.
Furthermore, ODA programs and initiatives have aided agricultural scientific and technology research in order to improve the quality and safety of agricultural goods while also increasing their competitiveness
Vietnam has implemented numerous projects across hydropower, thermal, and renewable energy sectors, enhancing power grids and distribution stations to boost the nation’s production, transmission, distribution, and management capabilities This development supports a robust annual load growth of 15–17% The transportation sector has benefited the most from ODA, with 132 projects funded by significant ODA capital, further driving infrastructure improvement and economic progress.
Between 1990 and 2013, the transport sector saw investments totaling 17 billion USD, driven by official development assistance (ODA) funding Of this, 83 projects used 5 billion USD in ODA and were fully completed, while 49 projects are currently underway with approximately 12 billion USD in ODA capital.
USD In this arena, ODA programs and projects have aided Vietnam in developing and improving its national transportation system, as well as regional and provincial traffic
ODA programs enhance education and training by supporting all educational levels, strengthening teaching and learning capacity, helping underprivileged children access schooling, and advancing the goal of education for all.
Technical assistance projects funded by grants have retrained tens of thousands of Vietnamese officials across diverse sectors such as engineering, technology, economic management, banking, finance, and public administration Through ODA programs, international experts from both regional and global backgrounds have worked in Vietnam, helping local professionals gain new skills, professional work habits, and a strong sense of responsibility in their roles.
ODA programs have improved healthcare quality by strengthening medical services, building advanced infrastructure for evaluation and treatment, and establishing antibiotic production facilities and blood transmission centers National initiatives supported by ODA, focusing on health, HIV/AIDS, and infectious disease prevention, have produced meaningful results In addition, ODA funding has played a key role in helping the health sector make progress toward the Millennium Development Goals.
Science and technology programs play a key role in transferring advanced management skills and expertise to agencies, research institutes, ministries, sectors, and localities Through ODA projects in fields such as computer technology, biotechnology, materials technology, and construction technology, significant progress has been made A prime example is the development of infrastructure at Hoa Lac Hi-Tech Park in Hanoi, notably Vietnam's spaceflight project, which received funding from Japan.
Vietnam has leveraged foreign expertise and Official Development Assistance (ODA) to strengthen its legal and institutional framework during its transition to a market economy, with particular focus on international and regional integration, including accession to the World Trade Organization (WTO) Key legislative reforms influenced by ODA include the drafting and implementation of laws such as the Construction Law, Land Law, Commercial Law, Foreign Investment Law, and Enterprise Law, all aimed at fostering a more robust and competitive business environment.
The status of ODA capital mobilization
2.2.1 Vietnam's regulations on management of capital attraction and use
Since the first Donor Conference for Vietnam in November 1993, the Vietnamese government emphasized effective management and utilization of Official Development Assistance (ODA) resources The government asserted that external capital must be used efficiently, acknowledging its responsibility for any failures resulting from ineffective use of these funds.
Prior to 1993, the management and allocation of international loans, aid, and ODA were governed by separate Prime Ministerial decisions for each program and donor, rather than by standardized legal frameworks This absence of cohesive regulations hindered the ability to oversee the entire project cycle—from mobilizing resources and signing international ODA agreements to implementing projects and monitoring their outcomes As a result, coordinating and utilizing funds effectively to meet development priorities faced significant obstacles.
At the Vietnam donor conference, the Vietnamese Government pledged to strengthen the legal framework for managing and utilizing international loans and grants On August 30, 1993, Decree 58/CP was issued to regulate foreign debt borrowing and repayment, followed by Decree 20/CP on March 15, 1994, which established rules for the management and use of official development assistance (ODA) and other foreign loans These decrees marked the Government’s initial effort to formalize the legal basis for attracting, managing, and utilizing international financial aid.
Decree 58/CP and Decree 20/CP have played a significant role in establishing order in the management and use of international loans and grants, aligning with donor expectations By encouraging the creation of dedicated investment management units within ministries, provinces, and centrally-run cities, the decrees created a unified structure for coordinating funding activities While these policies helped streamline processes and reflect input from international donors, the Government of Vietnam recognized weaknesses that required further revision Consequently, relevant agencies have been tasked with studying and improving both decrees to maximize their effectiveness and address any outstanding issues.
On August 5, 1997, the Government implemented Decree 87/CP, establishing new regulations for the management and use of official development assistance (ODA) and replacing Decree 20/CP Subsequently, on November 7, 1998, Decree 90/CP was issued to update regulations on borrowing and repaying foreign debts, superseding Decree 58/CP Following these changes, various ministries and sectors released guiding circulars, such as Circular No., to provide detailed instructions on ODA management and usage.
15/1997/TT-BKH dated October 24, 1997 guiding the implementation of regulations on management and use of ODA, promulgated together with Decree 87/CP…
On May 4, 2001 Decree No 17/2001/ND-CP promulgating regulations on management and use of official development assistance and Decree No
Decree 52/1999/ND-CP in Vietnam established a comprehensive legal framework for the management and use of Official Development Assistance (ODA), aiming to create a more open and flexible environment for international loans and grants The decree enhances the authority and accountability of ministries, ministerial-level agencies, and local governments in managing ODA, while ensuring that the central government retains overall control of these critical resources, thus improving the effectiveness of international aid utilization.
On April 26, 2001, the Prime Minister issued Decision No 64/2001/QD-TTg on management and use of foreign non-governmental aid, replacing Decision No
Prime Minister’s Decision No 64/2001/QD-TTg played a major role in streamlining the management of foreign non-governmental aid in Vietnam, addressing longstanding issues of oversight and clarifying governmental responsibilities for handling and utilizing these funds Complementary regulations, such as Decision 28/199/QD-TTg and Circular 04/2001/TT-BKH, further guided the effective implementation of aid management policies Additionally, the Ministry of Planning and Investment and the Ministry of Finance issued Inter-Ministerial Circular No 02/2003/TTLT/BKH-BTC on March 17, 2003, setting out official protocols for financial planning related to programs and projects benefiting from official development assistance (ODA), ensuring transparency and efficiency in aid utilization.
In the 1990s, most ODA programs in Vietnam focused on individual projects In recent years, ODA initiatives have aligned with the Vietnam Development Goals (VDGs), the National Strategy for Comprehensive Poverty Reduction and Growth (CPRGS), and the Five-Year Socio-Economic Development Plan (SEDP) This shift reflects a move towards harmonizing international assistance, expanding direct budget support, and adopting programmatic approaches that operate through national systems and programs.
The Government of Vietnam has set strategic priorities for ODA utilization based on investment needs and development plans across sectors and regions Key focus areas for ODA allocation from 2006 to 2010 include agriculture and rural development—encompassing irrigation, forestry, fisheries, and poverty reduction—alongside modernization of economic infrastructure and expansion of social infrastructure in health, education, and population development Other priorities involve environmental conservation, human resource development, institutional strengthening, technology transfer, and research implementation The structuring of ODA capital aligns with these development objectives, emphasizing transportation, telecommunications, water supply and drainage, environmental sanitation, and notably urban development, which represents 37.34 percent of allocated ODA resources.
Figure 1 The ODA allocation ratio for fields from 2006 to 2010
During this period, over 20 percent of total Official Development Assistance (ODA) mobilization was allocated to the energy and industrial sectors, while agriculture, rural development, hunger eradication, and poverty reduction received more than 16 percent Health, education, training, environment, science, technology, and related sectors accounted for 37.34 percent of total ODA mobilization, and additional sectors received 26.66 percent of the overall funding.
Between 2010 and 2017, economic services and infrastructure attracted the largest share of ODA, receiving $15.77 billion or 47.6% of total disbursements Following this, services and social infrastructure secured $9.3 billion, accounting for 28.11% The multidisciplinary category ranked third with $3.89 billion (11.76%), while manufacturing received $2.67 billion, representing 8% of overall ODA during the period.
ODA has helped Vietnam build and develop a number of key sectors and fields, including transportation, warehousing, energy (energy policy, renewable energy, policy energy distribution), water supply and sanitation, education,
Energy & industry Agriculture & rural development Health, Edu, environment & IT Other sectors multidisciplinary fields, environmental protection, agriculture, forestry, and fisheries, government and civil society, medical, and budget support
Most ODA funding in the transport and energy sectors comes in the form of loans, and the proportion of loans has been steadily rising In the transport sector, loan capital made up 93.94 percent of ODA in 2010 and increased to 97.95 percent by 2017 Likewise, loans accounted for 95.57 percent of ODA in the energy sector during this period.
ODA capital for water supply and sanitation reached 82.62 percent, reflecting significant investment in these areas In the education sector, aid ODA represents nearly half of total ODA, accounting for 47.74 percent Environmental protection and multisectoral sectors each receive more than 30 percent of aid capital, highlighting strong support for sustainability initiatives ODA rates remained high, recorded at 96.73 percent in 2017 compared to 2010.
2.2.2 The process of managing and utilizing ODA
Current ODA projects are primarily managed and implemented under Decree 52/CP and Decree 17/CP, guiding the process for the attraction, management, and use of Official Development Assistance These regulations establish clear steps for handling ODA—from initial planning, project selection, and approval, to ongoing supervision and final evaluation—ensuring transparency and efficiency throughout all phases of project execution.
Each year before the fourth quarter, governing bodies must compile and submit to the Ministry of Planning and Investment a prioritized list of programs and projects for ODA mobilization, including detailed outlines that specify the necessity, alignment with planning objectives, anticipated outcomes, key activities, implementation timelines, estimated ODA and reciprocal funding The Ministry of Planning and Investment, with the cooperation of the Ministry of Finance, Ministry of Foreign Affairs, Office of the Government, Ministry of Justice, and relevant agencies, reviews and summarizes these submissions to prepare a final list of priority programs and projects, which is then presented in the Government's annual report to the Donor Advisory Group for ODA mobilization.
Some basic successes, reasons for limitations in management and use of
3.1 The environment in which ODA is attracted to and used
Currently, the global ODA landscape shows a rising share of bilateral aid compared to multilateral aid, driven by international economic integration and concerns over the efficiency of some multilateral organizations Direct country-to-country ODA relationships have become more attractive, while hesitancy toward multilateral channels has resulted in a noticeable drop in multilateral aid contributions Additionally, competition among developing countries for ODA funding is intensifying, with Asian nations alone needing an estimated $1400 billion for infrastructure development between 1995 and 2004, according to the World Bank.
Asia currently lacks a market for long-term infrastructure loans spanning 20 to 30 years, fueling intense competition among developing countries for Official Development Assistance (ODA) funds to support critical projects.
Between 1960 and 1990, official development assistance (ODA) from DAC countries to developing nations saw consistent growth Although ODA amounts increased, the share of ODA relative to DAC countries' gross national income (GNI) declined from 1960 to 1970, followed by periods of fluctuation Over the last two decades, average annual ODA rates have remained around 0.27 percent and 0.36 percent of GNI, reflecting ongoing variations in development funding trends.
Following the significant effects of the early 1990s global economic crisis, Official Development Assistance (ODA) experienced a noticeable decline in both real and nominal terms Between 1993 and 1997, ODA inflows dropped by 16 percent, while ODA’s share of global gross national product (GNP) decreased from 0.33 percent in 1992 to a historic low of 0.22 percent.