The progress of East Asian economies inrecent years illustrates a strong symbiotic relationshipamong higher education, innovation, and growth through theproduction of research and skills. In the case of Vietnam,higher education has a significant positive effect onhousehold poverty and long-term earnings at the individuallevel, where annualized private returns to higher educationare above fifteen percent, one of the highest levels in theworld. As Vietnam aspires to become an upper middle-incomecountry by 2035, its productivity needs to increasecontinuously, which requires greater production andeffective use of highskilled manpower and science,technology and innovation (STI). There is a disconnectbetween Vietnam’s remarkable achievement on equitableeconomic growth and human development, on the one hand, andthe performance of the higher education system, on the otherhand. Vietnam has experimented with a number of highereducation reforms in the last two decades, with some successin expanding access but missing opportunities in achievinggood results on quality and relevance, and in furtheringequity. The main objective of this Bank’s report is toprovide a diagnosis of the current performance of theVietnamese universities and propose a range of options fortransforming and developing the higher education system.