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Attracting foreign direct investment in the Lao People's Democratic Republic - 2


LIST OF TABLES


Table of Contents

Table 1.1: FDI capital of the 10 largest recipient countries in South, North and South-North Asia (billion USD) 52

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Table 2.1. Situation of attracting foreign direct investment in Laos in the period 1988 - 2008 82

Table 2.2: FDI capital and projects by industry and sector in Laos 91

Attracting foreign direct investment in the Lao People's Democratic Republic - 2

Table 2.3: FDI into Laos by region in the period 1988 - 2008 94

Table 2.4: Summary of FDI sources in Laos by country 97

Table 2.5: Investment capital for socio-economic development of Laos in the period 2001 - 2008. 98 Table 2.6: Changes in the structure of Laos's economic sectors 101

Table 2.7: Exports of FDI enterprises from (2000 - 2008) 104

Table 2.8: Ranking of 178 countries in the world on investment licensing procedures 130

Table 3.1: Balancing capital sources according to basic development plan 141

Chart categories

MacDougall - Kemp model (1964) 31

Chart 1.1: FDI capital operating in the world from 1980 - 2007 50

Chart 1.2: FDI capital in regions and countries around the world 51

Chart 2.1: Laos' GDP growth rate (1981 - 2009) 67

Chart 2.2: Inflation rate in Laos (1996 - 2008) 68

Chart 2.3: Kip exchange rate (1985 - 2008) 69

Chart 2.4: Average GDP per capita in the period 2000 - 2008 71

Figure 2.5: Average project size by stage in Laos 84

Chart 2.6: Implemented capital and registered capital in 2000 – 2008 85

Chart 2.7: Capital by form of FDI in 1988 - 2008 86

Chart 2.8: Number of projects by FDI forms in 1988 - 2008 87

Chart 2.9: Registered capital by main forms of FDI in the period 2000

- 2008................................................... .......................................... 88

Chart 2.10: Registered capital ratio of main FDI forms in the period 2000-2008 88

Chart 2.11: Project balance by main FDI forms in the period 2000 - 2008 89

Chart 2.12: Project ratio of main forms of FDI in the period 2000-2008 90

Chart 2.13: Percentage of projects by industry structure (%) 92

Chart 2.14: Investment capital ratio by industry structure (%) 92

Chart 2.15: Growth rate of economic sectors 102

Chart 2.16: Import and export situation of Laos in the period 2000 - 2008 105

Chart 2.17: State budget revenue sources 107

Chart 2.18: Number of direct jobs in the FDI sector from year (2000 –

2007) ................................................. .......................................... 109

Chart 2.19: Percentage of employees by industry 2005 – 2008 111


INTRODUCTION


1. Urgency of the research topic

In today's era, the trend of regional and global economic integration is taking place strongly. This has made the world economy increasingly become a unified whole, requiring countries to open their economies and actively participate in international economic relations.

Along with the trend of increasing international cooperation and economic globalization, foreign direct investment (FDI) is a hot topic and is increasingly attracting attention in the world. In particular, for most developing countries, FDI plays a very important role in the country's economic development process, because these countries always have a great need for capital. Capital is an indispensable key to the socio-economic development process of a country. Through FDI, the recipient countries can acquire capital, advanced technology and techniques, management experience and learn about the foreign market. Therefore, FDI has become an important part of international economic relations. Therefore, in the world, there has been and is a competition between countries to attract the maximum amount of FDI capital.

In line with that trend, the Lao People's Democratic Republic (Lao PDR) has been actively participating in the above process. Attracting foreign direct investment is one of the top policies of the Lao People's Revolutionary Party and the Lao State. Attracting foreign direct investment is not only to solve the shortage of capital for investment in socio-economic development but also to create more jobs for workers. In recent years, foreign direct investment has contributed to the country's many important socio-economic achievements, realizing the goals set by the Party and the State. However, attracting FDI in Laos is still at a modest level and efficiency is not high. The evidence is that the FDI capital in Laos is not much and the structure is


not reasonable. Laos is one of the least attractive developing countries in attracting foreign investment.

For the above reasons, the author has chosen the issue: "Attracting foreign direct investment to the Lao People's Democratic Republic" as the topic of his PhD thesis in economics. In this thesis, the author analyzes the current situation of attracting foreign direct investment, the results achieved, the causes, and the limitations in the process of attracting FDI, thereby proposing a number of solutions to enhance the ability to attract foreign direct investment to the Lao People's Democratic Republic.

2. Overview of research situation related to the thesis topic

In general, the issue of attracting and using FDI capital is the subject of research by many domestic and foreign economists. Hundreds of articles, theses, dissertations and research works have been published. Some of the most recent related research works can be mentioned as follows:

* Doctoral thesis related to FDI attraction in Laos:

+ "Foreign direct investment in economic development in the Lao People's Democratic Republic" by Bua Kham Thip Pha Vong (2001). The author studied the capital investment needs for economic development in the Lao PDR. Laos still lacks capital, the internal accumulation capacity of the economy is limited, not enough to meet the huge capital needs for investment and development. Therefore, attracting FDI is important. The thesis analyzed the influencing causes and limitations, thereby proposing key solutions to effectively attract FDI capital into the Lao PDR for economic development [5].

+ "Improving financial solutions in attracting foreign direct investment (FDI) in the Lao People's Democratic Republic by 2010" by Xom Xa At Unxida (2004). In the thesis, the author analyzes the role of financial solutions to increase FDI attraction, evaluates the current status of financial solutions to attract FDI in Laos in recent years and the experience of some countries in the region in using finance to attract FDI. From there, the author proposes the main financial solutions to increase


Attracting foreign direct investment in Laos by 2010 such as: continuing to improve tax policies, government spending structure, monetary and credit policies, creating a stable political environment, improving the legal environment, and enhancing the effectiveness of macroeconomic management policies [29].

* Doctoral thesis related to the topic of attracting FDI capital into Vietnam:

+ "The impact of trade liberalization in the ASEAN Free Trade Area (AFTA) on attracting and attracting foreign direct investment in Vietnam" by Dam Quang Vinh (2003). In the thesis, the author has presented theories on the interaction between trade liberalization and international investment, examined the impacts of ASEAN trade liberalization on the process of attracting FDI into Vietnam; examined the development of the investment situation in the world and the region, especially with the impact of AFTA, in which direction will investment trends take place, what are the advantages and difficulties of Vietnam in the process of attracting FDI. From there, the author has proposed a number of solutions for attracting FDI into Vietnam [27].

+ "Solutions to attract and improve the efficiency of FDI capital use in Vietnam" by Nguyen Thi Lien Hoa (2000). In the thesis, the author presented and analyzed theoretical issues on FDI capital mobilization, current status and effective use of FDI capital through the stages. Then, the author proposed five groups of solutions to increase the attraction and improve the efficiency of FDI capital use [11].

+ "Solutions to increase foreign direct investment (FDI) attraction in Vietnam" by Nguyen Thi Kim Nha (2005). In the thesis, the author described the overall picture of FDI attraction in Vietnam from 1988 to 2004, assessed the successes and limitations of FDI attraction activities in Vietnam, analyzed the influencing causes, and from there drew out the issues that need to be further addressed to increase FDI attraction in Vietnam in the coming time [14].

In short, it can be said that up to now, the research topic on FDI in Laos has attracted a lot of attention. In those studies, they have proposed solutions to increase FDI attraction in Laos. However, although approached from many angles,


In terms of content, solutions to increase FDI attraction in Laos are often presented as part of the content in research works on FDI, but have not become the sole, systematic and updated content of a separate work. Thus, there is no thesis with content that overlaps with the topic "Attracting foreign direct investment in the Lao People's Democratic Republic" like this thesis.

3. Research objectives of the Thesis

- Research and clarify further basic theoretical and practical issues on attracting FDI of a country.

- Assess the current status of FDI attraction in Laos in recent times and point out existing problems that need to be further improved.

- Proposing a system of solutions to increase FDI attraction to Lao PDR in the coming time.

4. Research object and scope

- Research object: The thesis focuses on studying FDI attraction in Lao PDR.

- Scope of research: The thesis deeply studies the situation of attracting FDI into Lao PDR from 1988 to 2008. The basic impacts of FDI on the entire economy of Laos will be mentioned in related issues.

5. Research methods

To achieve the proposed purpose, the author uses the methods of dialectical materialism and historical materialism, using synthesis and statistical analysis, using a combination of tables and charts to calculate, illustrate, compare and draw conclusions. In addition, the author will use the method of analyzing documents and research works at home and abroad on issues related to the research topic.

6. Scientific contributions of the thesis

- Systematize and contribute to clarifying some basic theoretical issues on FDI for a country.


- Presenting a panoramic picture of FDI attraction in Lao PDR from 1988 to 2008; evaluating the success and limitations of FDI attraction activities in Laos; analyzing the causes affecting those successes and limitations, to enhance FDI attraction in Laos in the coming time.

- Propose viewpoints and solutions to increase FDI attraction to Lao PDR in the coming years, including some viewpoints and solutions that are breakthroughs in terms of thinking, viewpoints and implementation level.

7. Structure of the thesis

The thesis consists of 174 pages with references to 86 domestic and foreign documents, using tables and other relevant appendices. In addition to the introduction and conclusion, the thesis is structured into 3 chapters as follows:

Chapter 1: Basic theoretical issues on attracting FDI of a country Chapter 2: Current status of attracting FDI to the Democratic People's Republic of Vietnam

Laos 1988 - 2008.

Chapter 3: Solutions to increase FDI attraction in the Lao People's Democratic Republic.


Chapter 1

BASIC THEORETICAL ISSUES ON FDI ATTRACTION OF A COUNTRY


1.1. THE NATURE OF FDI

1.1.1. Concept and characteristics of FDI

1.1.1.1. Concept of FDI

Investment in a broad sense, generally means the sacrifice of current resources to carry out certain activities in order to gain for the investor certain results in the future greater than the resources spent to achieve those results. Those resources can be money, natural resources, intellectual labor... In a narrow sense, investment is the entire financial potential. Investment is the use of capital in the process of social reproduction to create greater capital capacity.

Investment capital is the social accumulation of industries, production and business establishments, people's savings and capital mobilized from other sources put into social reproduction. From the perspective of enterprises, investment is the movement of capital into a certain activity with the aim of earning a larger amount of money.

Investment capital is the capital accumulated in the production and business activities of individuals, collectives and the State in order to invest in expanding production and services or creating new production capacity. At the national level, investment capital is divided into two types: domestic capital and foreign capital. Therefore, investment activities are also divided into two basic forms: foreign investment and domestic investment.

Investment capital includes tangible assets such as capital, land, houses, equipment, materials..., intangible assets such as patents, inventions, technical know-how, trademarks... In addition, investors

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