ASSESSING THE IMPACT OF PUBLIC SPENDING ON SCIENCE AND TECHNOLOGY TO PROMOTE INNOVATION IN VIETNAM AND POLICY RECOMMENDATIONS

In the context of advancing the knowledge-based economy, public spending on science and technology (S&T) is regarded as a critical lever for fostering innovation in Vietnam. However, the link between increased S&T budget allocations and actual innovation outcomes remains ambiguous. This study proposes and empirically tests a theoretical model that examines the effects of four key characteristics of public expenditure – priority, stability, functional allocation, and actual disbursement size – on innovation outcomes. The model incorporates budget allocation efficiency as a mediating variable and institutional capacity as a moderating variable, with economic scale controlled. Based on Structural Equation Modeling (SEM) analysis of data from 396 experts, the findings reveal that three expenditure characteristics significantly influence innovation outcomes indirectly, with actual disbursement size demonstrating the most notable impact. Meanwhile, institutional capacity does not yet show a clearly moderating role. The results underscore the pivotal mediating role of budget allocation efficiency, implying that institutional reforms and performance-based governance are essential conditions for public investment in S&T to generate transformative innovation.