The efficiency of labor use in the FDI sector is high compared to other sectors in the province. On average, in the period 2000 - 2010, a worker in the FDI sector will generate more than 263 million VND, many times larger than the domestic investment sector in Nghe An province. This reflects that in the FDI sector in Nghe An province, factors of technology, engineering, labor skills, and labor efficiency are superior and have made significant progress compared to the level of domestic investment. In addition to the contribution of input factors to the economic growth of the FDI sector such as capital and labor, there is also the contribution of total productivity factors to economic growth in Nghe An province.
2.2.3.3 Contribution level of FDI sector to economic growth of Nghe An province
Table 2.14: Contribution of FDI sector at current prices to Nghe An GDP in the period 2000 - 2010
Year
Contribute to GDP (tr) | Speed of increase GDP (%) | Contribution rate for GDP (%) | |
2000 | 53,905 | 12.06 | 0.68 |
2001 | 75,658 | 15.08 | 0.83 |
2002 | 157.105 | 14.34 | 1.50 |
2003 | 228,233 | 16.28 | 1.88 |
2004 | 236,242 | 20.12 | 1.62 |
2005 | 278,403 | 17.94 | 1.62 |
2006 | 297,284 | 15.94 | 1.49 |
2007 | 298,964 | 16.23 | 1.29 |
2008 | 386,850 | 31.80 | 1.27 |
2009 | 447,199 | 14.96 | 1.27 |
2010 | 520,987 | 12.52 | 1.32 |
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Source: Nghe An Province Statistical Yearbook
The FDI sector has contributed to the growth and development of Nghe An province and the contribution level has been relatively stable over the years. However, the level
The contribution is still very modest, of which the highest was in 2003 with 1.88% of GDP. From 2000 to 2010, nominal GDP continuously increased over the years with an average growth rate of 17.2% and the contribution ratio of implemented FDI capital to GDP was 1.34% per year on average. In the 5 years from 2001 to 2005, the average GDP increased by 16.75% and the contribution ratio of implemented FDI capital to GDP was 1.49% per year on average. In the period from 2006 to 2010, the average GDP increased by 18.92% and the contribution ratio of the FDI sector to GDP was 1.33%.
Thus, during this period, the average GDP growth rate increased, but the contribution of the FDI sector's added value to GDP decreased because the world economy was facing difficulties during this period, so foreign investors did not tend to expand their business or invest in new areas.
The growth rate of VA of FDI sector and GDP growth in Nghe An province is shown in the following graph:
120.00
100.00
80.00
60.00
40.00
%VA increase
%GDP growth
20.00
0.00
Year Year Year Year Year Year Year Year Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Table 2.5: Growth rate of FDI sector's VA and GDP of Nghe An province in the period 2001 - 2010
Source: Nghe An Province Statistical Yearbook
The growth rate of VA in the FDI sector in the period 2000 - 2003 was higher than the GDP growth rate at real prices, which contributed to the increase in GDP for the whole province. However, in the following years from 2004 - 2008, the growth rate decreased again, which negatively affected the economic growth of the province. After this period, the growth rate of VA increased again, which is a good sign for the contribution trend of the FDI sector in Nghe An province.
2.2.3.4 Export rate of FDI sector
14%
12%
10%
8%
6%
4%
2%
0%
Year Year Year Year Year Year Year Year Year Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Proportion
Percentage
Table 2.6: Proportion of FDI sector exports in total exports in Nghe An in the period 2000 - 2010
Source: Nghe An Province Statistical Yearbook
FDI has impacted the total export value in Nghe An province with an increasing contribution.
Table 2.15: Export turnover of FDI sector and of Nghe An province
period 2000 - 2010
(Unit: 1000 USD)
Year
Total export turnover | Export turnover FDI sector | Proportion (%) | |
2000 | 22,965 | 2,132 | 9.28 |
2001 | 35,356 | 3.525 | 9.97 |
2002 | 51,563 | 578 | 1.12 |
2003 | 58,765 | 4,843 | 8.24 |
2004 | 54,483 | 1,322 | 2.43 |
2005 | 86,589 | 6,696 | 7.73 |
2006 | 98,547 | 7,886 | 8.00 |
2007 | 114,416 | 8,984 | 7.85 |
2008 | 135,268 | 10,564 | 7.81 |
2009 | 103,880 | 12,468 | 12.00 |
2010 | 123,637 | 16,165 | 13.07 |
Source: Nghe An Province Statistical Yearbook
On average, in the period 2001 - 2005, the contribution rate of the FDI sector to export turnover was 5.9%. In the period 2006 - 2010, the contribution rate increased significantly. On average, in 100 USD of total export turnover of Nghe An province, the FDI sector contributed 9.75 USD, thus the increase rate was nearly 2 times higher than the previous period. Thus, FDI capital has gradually promoted its effectiveness in export activities, however, the contribution rate is not significant. The products of the FDI sector in Nghe An province are mainly wood chips, centrifugal electric poles, animal feed, gas lighters, white stone, MDF wood...
gradually towards foreign markets. In 2002 alone, export turnover decreased sharply due to the FDI sector focusing on the domestic market, competition from competitors from countries such as China and other countries in the region, and some products not meeting export standards. The increasing contribution of the FDI sector to total export turnover has partly demonstrated the positive role of this sector in Nghe An province. The increasing export value contributes to increasing the competitiveness of Nghe An's economy and also demonstrates the openness of the local economy in the process of international economic integration.
2.2.3.5 Contribution rate to Nghe An province's budget revenue of the FDI sector
Table 2.16: Budget revenue of FDI sector and Nghe An province
period 2000 - 2010
Unit: Million VND
Year
Total provincial budget revenue Nghe An | FDI sector revenue | Proportion (%) | |
2000 | 1,686,554 | 1,762 | 0.1 |
2001 | 1,762,323 | 23,564 | 1.34 |
2002 | 2,721,750 | 34,878 | 1.28 |
2003 | 4,694,596 | 40,669 | 0.87 |
2004 | 5,213,419 | 31,199 | 0.60 |
2005 | 6,730,261 | 33,947 | 0.50 |
2006 | 7,322,361 | 20,484 | 0.28 |
2007 | 10,039,699 | 33,741 | 0.34 |
2008 | 12,697,746 | 53,250 | 0.42 |
2009 | 14,455,389 | 62,540 | 0.43 |
2010 | 16,567,652 | 67,234 | 0.41 |
Source: Nghe An Province Statistical Yearbook
In recent times, the contribution of the FDI economic sector to the provincial budget has been increasing. In the period 2006 - 2010, the total revenue reached
237,249 million VND, an increase of 44.45% compared to the period 2000 - 2005. In the period 2000 - 2005, the budget revenue of the FDI sector increased steadily, but in 2006 there was a significant decrease, and in the period 2007 - 2010 it continued to increase. However, if considering the contribution rate to the total state budget revenue, it accounted for a small proportion and tended to decrease in the period 2005 - 2010, this is because the main source of revenue from the FDI sector is from corporate income tax, land rent... but due to preferential policies in Nghe An province as well as the Government to encourage and financially support foreign investors such as corporate income tax exemption, land rent exemption...
Although it has contributed to the Nghe An provincial budget, the contribution rate of the FDI sector tends to decrease, which is not a good sign for the province's economy.
120%
100%
80%
60%
40%
FDI/VTH revenue ratio
Revenue rate of DTTN/VTH
20%
0%
Year Year Year Year Year Year Year Year Year Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Table 2.7: Ratio of FDI revenue to realized capital
For the FDI sector, the ratio of state budget revenue to actual investment capital is lower than that of investment in other sectors. During the period from 2001 to 2010, on average, every 100 VND of capital from the provincial sector generated 74.55 VND for the state budget, while the FDI sector only generated 54.82 VND.
2.2.3.6 Contribution rate of FDI sector to job creation
Table 2.17: Number of employees in the FDI sector and Nghe An province in the period 2000-2010
Unit: Person
Year
Total number of employees | FDI sector labor | Proportion (%) | |
2000 | 1,116,569 | 324 | 0.03 |
2001 | 1,215,256 | 524 | 0.04 |
2002 | 1,341,508 | 765 | 0.06 |
2003 | 1,417,677 | 864 | 0.06 |
2004 | 1,477,687 | 1,224 | 0.08 |
2005 | 1,467,536 | 1,295 | 0.09 |
2006 | 1,524,129 | 1,863 | 0.12 |
2007 | 1,584,692 | 1,226 | 0.08 |
2008 | 1,607,220 | 1,208 | 0.08 |
2009 | 1,609,432 | 1,448 | 0.09 |
2010 | 1,765,245 | 1,563 | 0.09 |
Source: Nghe An Province Statistical Yearbook
The number of workers in the FDI sector accounts for a small proportion of the total number of workers in the province. This partly shows that the FDI sector has not attracted workers to work and the number of jobs created in this sector is still low. On average, in the period 2001 - 2005, the number of workers in the FDI sector only accounted for 0.07% of the total number of workers in the province, in the period 2006 - 2010 it increased to 0.09%, but the average increase was not significant. This shows that compared to other sectors, the FDI sector attracts very few workers to work.
250
200
150
100
FDI Labor Union
VTHBQLLD DTTN
50
0
Year Year Year Year Year Year Year Year Year Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Table 2.8: Average realized capital per worker in Nghe An province in the period 2000 - 2010
Source: Nghe An Province Statistical Yearbook
According to the average capital per worker, in the period 2001 - 2005, on average for the FDI sector, every 111.87 million VND spent will create an additional worker for the economy, this capital spent is too much if we compare with the non-FDI sector, which only needs 4.18 million VND. In the period 2006 - 2010, FDI capital attracted more workers, the average capital per worker decreased to 58.35 million VND, this proves that FDI projects tend to use more labor, although it is still much higher than the non-FDI sector (only 9.28 million VND).
2.2.3.7 Proportion of realized FDI capital compared to total development investment capital
Attracting FDI capital into Nghe An province has contributed to the total investment capital of the whole society. However, the level of contribution is very modest. This proves that attracting FDI capital into Nghe An province is still weak, not meeting the demands of the economy. In the period 2000 - 2003, the proportion of FDI capital tended to increase, but in the following period, this proportion decreased and tended to increase insignificantly. In 2003, this proportion was the highest at 3.92%, the lowest was in 2006 at only 2.35% of the total capital.