Rethinking economics of growth and democratisation in the emerging world: the value of intangibles

Isn’t it a first-world issue?

Our world has been torn apart with gaps and inequalities, those who are developed, and those who are to catch up. We oftentimes converse about the declining birth rate, and dynamics in the developed world, which carries dominating perceptions of anxiety and depression. A society needs to see signs of continuity, and connection between the past, the present, and the future. If the politicians could not offer an outlook of how the future is shaped, the populists are there to drag us back to the “glorified” past, depicted by half-truth and half fiction; but more importantly, it is impossible just to travel back to the past. And yet, the populists prove to be so successful in mining the source of anxiety for all the uncertainties the future might turn out to be. If we take the matter that way, inequality is just one among the causes of populism’s rise; even inequalities should be delt with through pro- social security policies more corporate taxes, and wealth re-distribution, the politicians are up to a task of presenting a viable future that is desirable and shareable among our people through dialogues and their political manifestos. Bear in mind that the strength and legitimacy of democracy, like any other system, relies upon the capability to exude a healthy sense of patriotism and build national consensus. But this problem is not peculiar to developed nations, it will soon come to occupy the political thoughts and concerns from the developing World. As a citizen in a developing country, I realise that the country’s intellectuals and politicians never see the growth as an end, it is purely a means or an engine to the achievement of a desirable future.

 Politicians from the developed world sit on the argument that it is extremely difficult to deal with a grumping population that demands more welfare benefits, more immigration control, and less working hours (which means the decline in productivity, and growth). But it might just be laughable and dismissed as “first-world problems” or rich guys always complain the loudest by our world of developing nations. Politics is to deal with the complexity of course, but it should not be too difficult to have the world’s largest wealth and assets, just not know how to distribute it in an equal way and how to share in a way that satisfies everyone. The politics of developing nations is concerned with a far more impotent reality of having no resources to spend and limited wealth to distribute. And the hurdles might not come in the form of western populism, it might be something else, depending on each country’s specific contexts in one sense, yet not less disastrous and painful in another sense.

The agonies of growth in emerging nations

The world of disruptive change and reconfigured globalisation does not indicate something otherwise, but a catch-up game in which emerging economies are still in, just more intensifying and narrowed-down with those economies having to compete among one another for less and less global stakes. This catch-up and competitions are subject to geopolitics, while their national institutions are key to determine who will get their feet ahead in the race. Geopolitical advantage might be a powerful leverage, and yet it shall not be seen as the only game-changing factor. And all in all, it comes down to who among the developing countries can continue growing and pulling off the global challenges through good institutional responses. It is urgent as if it were a sprint in which we have to start from now, but it is also sensible to have a few minutes of reflections and brainstorming for the fact that we’ve of late not just been pre-occupied about the quantity of growth, but also its quality. The quality of growth ensures it is long-term and sustainable.

Emerging economies need more pushes on growth, but the old pathway of growth might be less of a smart choice, and more of perils down the road.  I was born and bred in Vietnam, an Indo-Pacific emerging nation, and I grew up to see the fast pace of urbanisation, characterised with the expansion of urban space, and volume of private vehicles in my city. However, even with double-digit growth we've never had, there’s no illusion that the tasks might be easier, or less tangled over time, it is just getting more upended for each stage up. We sare till decades away from the average line of GDP per capita, and the global competition for FDIs is getting more bitter with more players over less capital and more difficult conditions attached. It would imply that foreign investment-driven growth is attained at the expense of less safeguards of the environmental and labour conditions; the emerging economies might even have to escalate the agonies of cheap and intensive labour, and sales-off of their environmental assets to stay competitive. And this might be extremely painful to endure or grow with such terms and conditions. Our population would behave no differently from their counterparts in the developed world, they don’t see the growth in the technically laden papers, they feel it on their dining table, and how they earn their everyday living. And they have their own expectations not to see the growth in the papers, but a kind of growth reflecting their securement of social standing, and confidence for the middle class, or opportunities to elevate themselves to better social and financial statuses for the bottom 50%. Even assuming growth is substantial among the majority, but little to no growth is seen for some certain groups; the backlashes could still be disastrous with the prospects of social and political chaos. Therefore, it is unavoidable for us to come to the discussion on how to re-define the concepts and components of growth in the new global context.

What we’ve learnt from Eastern European countries is that there have been growing expectations that they would catch up with their counterparts in Western Europe in a matter of a few years’ time, inequality closed between the East and the West, and enormous wealth created was spent on social welfare. Eastern Europe has grown fast and living standards have improved for a matter of fact, yet failing to meet the population's expectations. Hope turned to distress and anxiety overnight. To make the matter worse, the countries have been facing out-migration of the youngsters who sought to migrate to high-income western economies, and the declining birth rate, which means fewer newborns and less working-age population to sustain the national welfare. As the future looked stark and the catch-up game seemed ever more improbable even with Eastern Europe being part of the world’s largest single market, and the Union of the most affluent economies, and being the receiver of shared prosperity of the Bloc. And once hope went crashing, the friction fueled the rise of populism across the Continent. And that’s why I saw Orban rose to domination in Hungary, AfD winning the majority in Eastern Europe, and populism spawning fast and soon reaching a quarter of the votes.

The emerging economies in Indo-Pacific Region and those elsewhere might follow the same patterns soon, where rising expectations are be short-circuited and hope crashes. With different political and social contexts, the crisis might not be Western-style populism, and there might be something else, yet not less disastrous; and in many cases, social chaos it generates would plunge the emerging countries into the state of failure (failed state).

The politicians from emerging economies need to wake up to this reality and how things would turn against their favour in the world of disruptive change. And to face an economic crisis, for instance, richer economies have financial bailouts, toolkits for contingency or institutional responses; unfortunately, emerging economies might have to face any crisis with resources equating little to nothing. We’ve been through the devastating crises in the Asian financial crisis in 1997, these in 2010, the global public health crisis breaking down in 2020; but new crises might imply different consequences in a way old lessons learnt are insufficient to get us right. The magnitude of damage, greater or smaller, and rate of recovery might be faster or slower, yet crises also have to deal with psychological aspects and perceptions of the population. And how the crises have the implications on our politics depends on how people actually feel or have the attitudes towards it.

Even the economic damage could be mitigated, and broken domains be repaired, but a social expectation crisis might go beyond any repair, and it will render political and social institutions dysfunctional. It calls the politicians in emerging economies to take the right steps and lay down the right-structured bricks for the institutions, rather than sitting in complacency and waiting for the crisis to come. I often refer to our social fabrics as an ecosystem where elements or communities are inter-dependent, and the failure of one will be a domino effect that pulls down others along the line. And the collapse of a group or a community in society might turn a monstrous side, and pull our whole nation down the drain. Our politicians have to be kept awake to this reality. Hence, before diving down to the details of the discussion, it is emphasised that the growth formula, now matter how it is presented, must ensure inclusiveness and does not come at the expense of our social and environmental safeguards which are key to our living standards.

The demagoguery in Vietnam’s growth policies

With the ageing population in the coming decades, it is less viable to retain labour-intensive productions, and manufacturing with the assembly lines.  The crisis of living standards and lack of funding for social securities including access to health care, education, and retirement benefits will strain any government’s policies and strategies, and it will come with social and political instability. Therefore, the politicians need to act fast to transform the economy by investing in and building up what is needed. Unfortunately, many demagogues do not work to transform the economy, they just “find a way to ruin it in a nice way”.

The demagogic politicians from emerging countries could engineer growth by driving up government spending, or selling off more environmental assets and labour working conditions to attract more FDIs and take credits even for having done all that. It is the case in Vietnam and I wrote quite a few in-depth analyses about the disastrous policies proposed by the Party chief To Lam and Prime Minister Pham Minh Chinh in Vietnam to point out the fact that their policies and ideas for growth and development might sound gigantic and fabulous, yet still sticking to the old rutty pathway they once walked on and failed, and therefore will not bring about any change in terms of real substances, these are in other words just a recipe for new disasters that our future generations have to suffer once being put into practice by their words. A point has been raised in the World Bank Report: Vietnam 2045 Trading Up in a Changing World that over the past thirty years, carbon emissions from manufacturing has grown three times faster than GDP, and over one-third of carbon produced by the Vietnam’s economy is for export goods and produces (World Bank, 2025). As the economy keeps growing momentum with more environmental degradations, and the generated wealth might not be able to offset the cost for future environmental recovery. In the diplomacy of the report, we’ve seen Vietnam as a land conceded to the feudal landlords who came to establish their business and production without paying fair taxes and contributions to our economy. Profits from exports of goods just escape from the domestic economy, with the supply chain dominated by FDI enterprises while domestic businesses are left isolated. A dual economy is what they dubbed the state of FDI-driven economy we are having. The growth has been fast with the influx of businesses and FDI to Vietnam from 2014, but just Vietnamese people do not have ownership and autonomy over this growth. And thus, transformation is needed to re-gain our autonomy, confidence, and pride in our national growth.

However, how to transform the economy turned out to be a thorny question for Vietnam’s communist leaders as they struggled to make themselves sound more “pro-growth”, and politically relevant. Vietnam has long peddled their reserve of rare earth of 22 million tons, ranked second in the World, in a bid to attract the interests and investments of American big techs. The US Geological Survey has recently revised their estimate of rare earth reserves in Vietnam to be just 3.5 million metric tons, dashing the hope of Vietnam’s top leaders in developing the rare earth mining industry in Vietnam. However, we have been warned against the hazards of rare earth mining, which involves the digging to find out only 2% (if lucky) or less of the rare earth ores and 98% of spoil seen as waste no matter if there is gold, bauxite, and anything but rare earth; and heavy metals will enter the streams and water sources which carry the risks of cancers and cognitive development delays among the new-born. In a country which is already vulnerable to climate change and extreme events (any tropical storm would lead to erosion and landslides on a large scale), with only 2% of pristine forest remaining. The development of rare earth is a murder of our natural environment. And yet, our top leaders are determined to give it a go-ahead, and Vietnamese people are lucky for narrowly escaping a disaster thanks to not having the blessings they made the claim to.

Another disastrous policy I opposed was to spendthrift on public investments. The Prime Minister moved his feet here and there to brag about the nearly 70-billion-dollar plan for national high-speed railway running South from North, 13.8-billion-dollar high-speed railway connected to South China, a series of nuclear power plants worth another billions of dollars, so on and so forth. Public investments are necessary to guarantee the readiness of infrastructure and facilities for driving transformations of our country and economy. However, most of the public spendings proposed by the communist leaders lack a second thought, potentially leading our money to be squandered. We know that they see more government spending as a vehicle to drive up GDP, even with more government borrowing and budget deficits in an already heavily indebted country. They are stealing from our future generation to sustain some sort of growth to which they can claim legitimacy, and also their grip on power. These growth policies will destabilise Vietnam’s social securities and strip us of any resources and efforts we should have spent on our future. It is like consuming opiods for temporary feeling-good moments and more despair and problems added later on. Despite growing public scrutiny and opinions from the experts and civil society that the government should look to growth from building the domestic market, and domestic enterprises, while looking for ways to restructure the economy, as old drivers of growth have become no longer viable. Nothing out of nothing seems to be heeded by the ignorant leaders. But thank you, we would not need improvision of the same old growth tricks, we all need real and sustainable growth which speaks to the transformations of our country and economy.

Servitization of the economy and understanding the economics of the intangibles

While FDIs are still an uphill battle we are in, the economies should transition from the low-value production to high-value in the supply chains, as fast as good and there’s no secrets about it.  But the higher-value production would unavoidably require the servitization of the economy (or making service as the largest sector of the economy) and it should not need any explanation for the fact that any developed economy relies primarily on the service sector. But the “service” here is now heavily laden with the context of digital economy and the Era of information and advanced technologies (from renewable, automation, and human intelligence). The new age gives us new means and technologies of production, and we would not expect the same product outputs from our economy.

The service sector and digital economy are more inclined to produce the intangibles rather than physical materials, which are characterised by the lack of physical properties, albeit carrying real values. And to make the matter even more complicated, these intangible assets are undercalculated or in many cases are projected as “Zero” on the reference of GDP calculations. Such omissions sometimes blind us from seeing the real national issues and the reality of global inequalities we are facing. I have been arguing that even the developed world might see some declines, while fast growth is observed in many emerging economies, the gaps might actually get widened due to the old GDP reference might not capture all the intangible assets that the developed economies are producing while absent from the developing nations.

Indeed, the intangibles here could mean something partially calculated in the GDP from intellectual and patents, information assets in the digital economy; to something equal to Zero value in the GDP calculation such as good will, trust, brand reputations, organization cultures, or the free-of-charge applications of social media, or urban maps. However, these Zero-value essentials are the backbone drivers of our new economic models.

The economic growth of intangibles needs more rights and freedoms. The “creators” need freedoms to create the products, and express their thoughts and views. There must be a rule of law to ensure fairness and ensure the property rights and interests of the legitimate producers. There must be institutions inherently designed to protect the privacy to allow our citizens to store their data in the storage media operated either by the State or the private enterprises. Good will, trust, or branding reputations must, and organization cultures must be sustained in a democratic governance which allows transparency, and acknowledgement of human dignity, and the voices and roles of all the stakeholders.

And on top of our democratic institutions, we shall need advancement of positive freedoms (freedom to) such as access to health care, education, and rights to life through adoption of sustainable environmental and urban management solutions. Health care will certainly enhance the democratic institutions and make it more reliable by reducing the precarity for the population, while wider access to education will translate to more workforce for building the knowledge economy in the process of economic reforms. Sustainable environmental and urban management will ensure the harmony and integrity between the forest (and other natural environments) and the built environment, thus benefiting our country’s living standards. In this sense, in our old pre-industrial age and all the way through to the industrializations between the 60s and 2010s; mining and burning coal will drive up the economy’s GDP. However, in light of the new economic thinking, burning more coal in 2025 should be considered as the de-growth in the economy. Our economists come up with the concept of GDP-B to reflect the new nature of growth (B for Benefit). In specific, whereas an intangible value cannot be calculated, it will be evaluated based on how much people are willing to spend to live without it. Burning coal, for exmample would cause air pollutions and decline in the public health, and many people would be ready to trade the lower GDP for the benefit of clean air quality for no burning of coals or fossil fuels (supposedly, even though they don’t have to for the fact that renewables are getting cheaper than coal-fired power production). Although I think there won’t be any shift to the use of GDP-B for all the biases and relativity it might carry for any try with this adoption of this concept, but it brings us to rethinking the concept of growth in the New Era of growth and development. And while we say safeguards of rights and social securities must not be sacrificed for growth, the new economic models incorporate rights and social securities as a contributor or value in the aggregate growth, not just purely attachments or conditions to satisfy for it anymore.

To be bolder, economists should not shy away from recognizing that democratic institutions, together with rights and freedoms, are actually not just the guarantors of growth; in the new context, they are actually also the most valuable and cherished assets of our economy. The erosion of democratic institutions today will sooner or later have a repercussion on growth tomorrow, and should be counted as the asset loss in our economy. All these speak to the arguments that democracy and democratic institutions should be strengthened and more progressive values placed on top of that. And these arguments along the line will lead to a conclusion that the democratisation of emerging economies will still gain renewed favours in the new era with increased awareness.

In other words, the restructuring and transformation of the economy needs the expansion of rights and democracy through building up democratic institutions, rule of law, mechanisms for transparency and accountability, with the guarantees of social security welfare, and environmental & social substantiality. These are also the intangibles of our economy that we need first and foremost. The complexity of growth in the global context will surpass any capabilities of the wannabe technocrats who assume that they can enforce the effective economic policies by thinking and acting smart, while still ruling with authoritarian instincts. It might work in the most preliminary economy of coal and steel productions, although there is no such technocracy that works in the new political context.

More motivations for democratisation in Indo-Pacific countries

One might argue that Indo-Pacific nations lack motivations to democratize their political system with the retreat of America as the active player in the Region; nonetheless, democratisation has been now key to growth and transformation, with democratic rights to be seen as both assets and drivers of the economy with all the facts and arguments presented above. Any backsliding from democracy will make the difficult and challenging tasks of catch-up ever more improbable. There is natural favour to strengthen institutions and expand democratic rights now and in the years to come. Even I’ve been communicating to the country’s businessmen and dignitaries I’ve met that if the hurdles on democratic transition remain there in our country, we will soon get caught up in crisis and disorder, because authoritarian rule and institutions have us totally unprepared for new thinking and fresh context of the New Era. And our Southeast Asia recent developments have shown the cleavage between those who hold secure placements in the New Era for having democratic institutions (such as the Philippines, Indonesia, and Malaysia) even flawed they might still be; and those who are being dragged back to destruction and irrelevance such as Myanmar, Laos, and Cambodia. And Vietnam has no reason not to go democratic if we all aspire to national transformation and take a step up in a New Era of growth and development. And let’s move attention away from the buzz sounds from Trump’s administration and the failing of American liberal democracy, we should take up the fight for democracy in Vietnam and in the Region as a fight as the only pathway for continued growth and integration in the world of disruptive change, with for the tomorrows of our country and children at the stake now greater than ever.