Fostering Innovation and Entrepreneurship in Universities: Solutions to Overcome the Middleincome Trap in Vietnam

Over the past three decades, Vietnam has achieved remarkable accomplishments in economic growth, poverty reduction, and gradual integration into the global economy.However, the country is increasingly facing the risk of falling into the middle-income trap (MIT), as its growth model based on cheap labor and natural resource exploitation is becoming less effective.Signs of stagnating labor productivity, low value-added in production chains, and heavy dependence on foreign investment are becoming more apparent.In this context, transitioning to a knowledge-based, innovation-driven, and entrepreneurial growth model is seen as an inevitable path to ensure sustainable development.In this new development trajectory, innovation and entrepreneurship are considered key drivers for promoting sustainable economic growth, and higher education institutions (HEIs) play a central role in this process.Vietnamese HEIs, in the era of national resurgence, are expected not only to fulfill their traditional roles of education and research, but also to become nuclei of the innovation ecosystemwhere new ideas are generated, entrepreneurship is fostered, and knowledge is disseminated to society.However, in Vietnam, this role has yet to be fully realized due to institutional barriers, financial mechanisms, and limitations in governance capacity.This paper will focus on analyzing the relationship between the middle-income trap and the innovation-entrepreneurship functions of HEIs.It explores how to integrate innovation into institutional development strategies and build a comprehensive innovation-entrepreneurship ecosystem, thereby helping Vietnam overcome the MIT through knowledge and creativity.The paper also proposes policy directions to enhance the strategic role of universities in transforming the national growth model.