COMMITMENT
I hereby declare that this is my personal research work. The data and results presented in the thesis are true.
The conclusions, solutions and recommendations of the thesis have never been published in any scientific work.
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Thesis author
PHONESAY VILAYSACK
ACKNOWLEDGEMENTS
During the process of doing my PhD thesis in economics at the National Economics University, I received the attention, enthusiastic help and support of many people. The following is my sincere thanks:
First of all, I would like to express my deep gratitude to my supervisors: Prof. Dr. Phan Cong Nghia - Vice President of National Economics University and my supervisors: Assoc. Prof. Dr. Tu Quang Phuong - Deputy Head of Investment Faculty for their enthusiastic guidance and valuable comments to complete the thesis successfully.
I would like to sincerely thank the Graduate School of the National Economics University for creating favorable conditions for me during the process of writing my thesis, thank the professors, associate professors, doctors, teachers in the school in general and in the Faculty of Investment in particular. Thank you to colleagues, friends, especially the Department of Investment Promotion, Ministry of Planning and Investment of Laos for creating conditions in terms of time, guiding the content and providing necessary information and documents for the analysis in the thesis, as well as comments to complete the thesis.
Finally, I would like to express my sincere thanks to my family, wife and children who have encouraged me, created conditions in terms of time, finance, and helped me with housework during the time I was writing this doctoral thesis in economics.
Glasses
PHONESAY VILAYSACK
INDEX
Cover page
COMMITMENT i
TABLE OF CONTENTS iii
LIST OF ABBREVIATIONS vii
LIST OF TABLES ix
INTRODUCTION 1
Chapter 1. BASIC THEORETICAL ISSUES ON FDI ATTRACTION OF A COUNTRY 6
1.1. THE NATURE OF FDI 6
1.1.1. Concept and characteristics of FDI 6
1.1.1.1. Concept of FDI 6
1.1.1.2. Characteristics of FDI 11
1.1.2. Forms of FDI investment 13
1.1.2.1. Business Co-operation by Contract (BCC) 14
1.1.2.2. Joint Ventures Company (JVC). 14
1.1.2.3. 100% Foreign - Owned Enterprises (FOE) 15
1.1.2.4. Forms of BOT, BTO, BT 16
1.1.2.5. Mergers and Acquisitions (M&A) 17
1.2. IMPACT OF FDI 17
1.2.1. Positive impacts of FDI on the host country 17
1.2.2. Negative impacts of FDI on the host country 25
1.3. SOME THEORIES ON FOREIGN DIRECT INVESTMENT 31
1.3.1. Macroeconomic theories 31
1.3.2. Microeconomic theories 33
1.4. FACTORS AFFECTING FDI ATTRACTION 36
1.4.1. Factors of the FDI receiving country 36
1.4.1.1. International economic relations of the receiving country 36
1.4.1.2. Political, economic and social stability 37
1.4.1.3. Legal system and policies 38
1.4.1.4. Infrastructure development 40
1.4.1.5. Development of the workforce 41
1.4.1.6. Completion of administrative procedures 42
1.4.1.7. Investment promotion work 43
1.4.2. External factors 44
1.4.2.1. World economic environment 44
1.4.2.2. Trends in international competition and cooperation 45
1.4.2.3. Trends in liberalization of international trade and investment 46
1.4.2.4. Scientific and technological revolution promotes international investment. 47
1.4.2.5. The role of transnational corporations (TNCs) 48
1.4.2.6. Investor-dependent factors 49
1.5. MOVEMENT OF FDI FLOWS IN THE WORLD AND EXPERIENCES OF SOME ASEAN COUNTRIES 49
1.5.1. The movement of FDI in the world 49
1.5.2. Experience in attracting FDI of some ASEAN countries 53
1.5.2.1. Thailand's experience 53
1.5.2.2. Malaysia's experience 55
1.5.2.3. Vietnam's experience 56
1.5.2.4. Lessons learned for attracting FDI in Laos 60
Chapter 1 Conclusion 62
Chapter 2. CURRENT STATUS OF FDI ATTRACTION IN THE LAOS PEOPLE'S DEMOCRATIC REPUBLIC IN THE PERIOD 1988 - 2008 63
2.1. GENERAL OVERVIEW OF NATURAL, ECONOMIC AND SOCIAL CONDITIONS IN LAOS THAT AFFECT FDI ATTRACTION 63
2.1.1. Natural conditions 63
2.1.2. Socio-economic situation 64
2.1.3. Advantages and disadvantages 71
2.2. LEGAL SYSTEM AND POLICIES FOR FDI IN LAOS .. 76
2.2.1. Legal framework for FDI activities of Lao PDR 76
2.2.2. FDI attraction policy in Lao PDR 78
2.2.3. Current investment promotion activities in Lao PDR 79
2.3. CURRENT STATUS OF FDI ATTRACTION INTO LAOS 1988-2008 PERIOD 81
2.3.1. Overview of FDI attraction in Lao PDR 81
2.3.2. Forms of FDI implemented in Lao PDR 86
2.3.3. FDI by sector implemented in Lao PDR 91
2.3.4. FDI implemented according to regional structure of Lao PDR 93
2.3.5. FDI by foreign partner structure 96
2.4. ASSESSMENT OF FDI ATTRACTION IN LAO PERSONAL DPR 98
2.4.1. Achievements 98
2.4.1.1. FDI adds important capital for development investment 98
2.4.1.2. FDI promotes growth and economic restructuring in Lao PDR 100
2.4.1.3. FDI contributes to increasing export turnover, expanding international markets, and increasing foreign currency revenue 102
2.4.1.4. FDI creates revenue for the State budget 106
2.4.1.5. FDI creates more jobs, increases income and develops human resources 108
2.4.2. Disadvantages of attracting FDI 111
2.4.2.1. FDI in imbalanced regions and sectors 111
2.4.2.2. FDI causes negative impacts on the labor structure 112
2.4.2.3. FDI causes environmental pollution 113
2.4.3. Some limitations 114
2.4.4. Causes of poor performance in attracting FDI in Laos 119
Chapter 2 Conclusion 133
Chapter 3. SOLUTIONS TO ENHANCE FDI ATTRACTION IN LAOS 135
3.1. PERSPECTIVES AND ORIENTATIONS ON FDI ATTRACTION IN LAOS PERSONAL REPUBLIC IN THE NEW CONTEXT 135
3.1.1. International and domestic development contexts 135
3.1.1.1. International context 135
3.1.1.2. Domestic context 137
3.1.2. Laos' economic development goals to 2020 138
3.1.3. Capital needs for economic development in Laos 140
3.1.4. Perspectives on attracting FDI in Laos 142
3.1.5. Orientation to attract FDI to 2020 144
3.2. SOLUTIONS TO ENHANCE FDI ATTRACTION IN LAOS 147
3.2.1. Continue to strengthen and stabilize socio-politics 148
3.2.2. Perfecting the legal system on FDI 149
3.2.3. Continue to improve FDI attraction policy 151
3.2.4. Improving the effectiveness of State management of FDI capital 159
3.2.5. Improving the quality of staff and labor for businesses
foreign invested 161
3.2.6. Support and assistance after the project is licensed and implemented 162
3.2.7. Increase investment in building infrastructure system 163
3.2.8. Building a strategy to attract FDI 165
3.2.9. Strengthening investment promotion activities 166
3.3. CONDITIONS FOR IMPLEMENTING SOLUTION 168
3.3.1. Recommendations to the Government 168
3.3.2. Recommendations to the Ministry of Planning and Investment 169
3.3.3. Recommendations to relevant Ministries and Branches 170
Chapter 3 Conclusion 171
CONCLUSION 172
LIST OF AUTHOR'S WORKS 175
REFERENCES 176
LIST OF ABBREVIATIONS
Abbreviations Vietnamese English ADB Asian Development Bank AFTA ASEAN Free Trade Area Asean Free Trade Area
APEC Asia-Pacific Economic Cooperation Forum
Asia Pacific Economic Cooperation
ASEAN Association of South East Asian Nations ASEM Asia-Europe Economic Cooperation Forum Asean European Meeting
CEPT Common Effective Preferential Tariff Scheme
Democratic People's Republic of China
Common Effective Preferential Tariffs Scheme
Industrialization - Modernization Industrialisation - Modernisation EU European Union
FDI Foreign Direct Investment GDP Gross Domestic Product GNP Gross National Production
GSP Generalised System of Preference IMF International Monetary Fund
M&A Merger & Acquitition
MFN Most Favored Nation Status
MIDA Malaysian Industrial Development Authority
Authority
MNCs Multinational Corporations
NAFTA North American Free Trade Agreement NEP New Economic Policy
NICs Newly Industrialized Countries NTR Normal Trade Relations
ODA Official Development Assistance
OECD Organization for Economic Cooperation and Development
economy
Organization for Economic Cooperation and Development
R&D Research and Development RM Malaysian Ringgit Malaysian Ringgit
TNCs Transnational Corporations
UNCTAD United Nations Conference on Trade and Development
United Nations Conference on Trade and Development
UNIDO United Nations Industrial Development Organization
United Nations Organization
USD United States Dollar United States Dollar
WB World Bank World Bank
WTO World Trade Organization Socialist Socialist