Home / Forestry

Developing agricultural and forestry processing industry in the provinces of the North Central region - 7


In which: KVi is the excess coefficient of industry i; Vi is the growth rate of industry i and Vcn is the general growth rate of the entire industry.

(2) Coefficient of consumption outside the region, export:

Spi

Maybe you are interested!

Kti = Sni

In which: Kti is the coefficient of product consumption by local people, outside the locality, and export; Sni is the output of key industrial products consumed outside the region; Spi is the output of key industrial products exported.

Developing agricultural and forestry processing industry in the provinces of the North Central region - 7

In addition, to determine key industries, it is also necessary to rely on technological innovation coefficients, resource and labor advantage coefficients...

(3) Scoring table method: Create a table with industries, then use the survey method, collect expert opinions to score according to the criteria in Michael Porter's theory and shuttle model with four groups of factors including: production factors; domestic demand factors; factors of supporting industries - related industries; factors of industry strategy, market structure and level of competition. The survey results are collected and statistical software such as STATA, SPSS is used for processing and analysis.

Use charts, such as Radar charts, to show the average and maximum scores of factors that affect industry competitiveness.

1.3. FACTORS AFFECTING THE DEVELOPMENT OF AGRICULTURAL AND FORESTRY PROCESSING INDUSTRY IN LOCAL ECONOMIC DEVELOPMENT

According to traditional economic theory, when considering the content of developing the agricultural and forestry processing industry in local development, it often originates from specialization in the production of products with comparative advantages in terms of input supply conditions such as capital, labor, land, and natural resources. Traditional economic theory has been based on the assumptions that there is no increasing efficiency according to scale, no scientific and technological progress, and no interdependence in the supply chain. However, in the current context, due to advances in production technology and innovation in enterprises, the competitive advantage of a locality in developing the agricultural and forestry processing industry is still limited.


depends on the competitiveness of enterprises located in the area. The new theory of local competitive advantage combines the theory of competitiveness of enterprises with local industry specialization and was introduced by Michael Porter in the diamond model of factors determining competitive advantage (see Figure 1.3).


State

Strategy, structure and level

compete

Conditions on input factors

Demand (market) conditions

Related and supporting industries

Random element


Diagram 1.3: M. Porter's diamond diagram in analyzing and evaluating the competitive advantage of an industry

From there, we can see the factors affecting the development of agricultural and forestry processing industry in local economic development as follows:

1.3.1. Input factors

The location's position in terms of the inputs needed to compete in an industry such as natural resource conditions, land, labor, capital and infrastructure.

Each locality inherits resources that make up different production inputs. These factors create the basic competitiveness of each locality or industry on the basis of absolute advantage or comparative advantage with other localities. However, it should be emphasized that rich resources are very important but in many cases not as important as the rate of use of those resources in the composition of products.


Input factors usually include human resources, natural resources, knowledge resources, capital, and infrastructure. The ratio of input factor usage in different industries is different, so a country can exploit its competitive advantage by building a strategy to develop industries with the most appropriate ratio of input factor usage. Production input factors can be divided into two main groups. The group of basic factors includes natural resources, geographical location, labor (unskilled and low-skilled) and borrowed capital. The group of advanced factors includes information infrastructure, skilled human resources, research centers and universities. Basic factors are often available, do not require large investments of time and capital. Basic factors create competitiveness in agricultural industries or industries that do not require high-tech investment such as civil construction. Advanced factors play an increasingly important role in determining a country's competitiveness. These factors require large and long-term physical and financial investments. Input factor sources can also be classified into general and special sources. General sources such as transport systems, capital, low-skilled labor resources can be used in all industries while special sources of labor skills or special infrastructure can only be used in certain industries. In fact, assessing the role of input factors in determining the competitiveness of each country is not simple. This depends on the efficiency of using these factors. Abundant input factors do not guarantee high competitiveness. Competitiveness also depends on the technology used and exploited for these resources. Another point to note is that human resources, knowledge and capital factors can move between countries, especially in the context of information technology development. Therefore, high-level knowledge resources do not necessarily create high competitiveness if these resources can be transferred to other countries that are more favorable for development.

However, we must also realize that competitiveness based on simple fundamentals is not sustainable. Other countries can quickly find imitative measures or "copy strategies" to overcome.


Advanced and special resources increasingly create special competitiveness for industries or countries. To ensure and maintain the competitiveness of a country, there must be an effective combination of input sources and a strategy to develop these sources. The strategy to build and develop input factor sources is more important than existing sources.

1.3.2. Groups of factors on local markets

The factors in this group are the most important basis for the development of the agricultural and forestry processing industry in terms of scale, product structure and speed. Market demand conditions include factors constituting market demand, scale and growth of demand and methods of transferring to foreign markets. Below we will consider each of these factors in detail:

The first is the composition of market demand. The greatest impact of market demand on a country's competitiveness is reflected in the characteristics of domestic market demand: This demand characteristic determines the approach, evaluation and response of domestic enterprises to the needs of domestic consumers. A country or an industry is highly competitive when domestic market demand provides a clear and comprehensive picture that guides the determination of world demand, or when domestic demand requires continuous innovation in design and technology.

Second is the scale and growth rate of demand. The scale and growth rate of domestic market demand strengthen local competitive advantage. Large market demand allows businesses to exploit economies of scale while encouraging businesses to invest in equipment, improve technology and labor productivity. This investment will build a foundation for businesses when expanding into international markets. The scale of the domestic market affects the competitive advantage of different industries differently. The scale of the domestic market plays an important role in industries that require large investments in research and development, large-scale production, and high technology. However, the market scale factor only creates competitive advantage for localities when the world market also has demand for


goods and services. Another factor is the number of independent buyers. A large and diverse number of independent buyers will promote product and technology innovation. On the contrary, a small number of buyers will limit the dynamism of businesses and make it difficult for businesses to participate in international markets.

Regarding the growth rate of market demand, we see that rapid growth of market demand encourages businesses to invest more in research and development, quickly applying new innovations to production. The growth rate of demand is increasingly important in the development trend of science and technology.

1.3.3. Local supporting industries

Local industries are interrelated and support each other to enhance the competitiveness of the region and the country. Specifically, with the agricultural and forestry processing industry, this factor first of all includes the mechanical engineering industry that manufactures processing equipment and processing lines. This is a very important industry in implementing investment in technological innovation for the agricultural and forestry processing industry. Whether the machinery and equipment are modern with good processing technologies or not is entirely determined by this industry. Next, we must mention the industry of energy production and supply, mainly electricity for the processing industry, which is also extremely important. Because whether the processing industry can achieve the level of mechanization, automation as well as the application of other modern technologies in the processing and preservation stages or not depends on the development of the electricity production industry, on the stable supply of electricity and at an acceptable price. Next, we must mention the packaging production industry of all kinds serving the packaging work to perform the protective function and the commercial function for the agricultural and forestry processing industry. The role of packaging is increasingly important and has great significance for the development of the agricultural and forestry processing industry. The agricultural and forestry raw material production industry, specifically the agricultural production industry with the sub-sectors of cultivation and livestock; forestry production with exploitation and afforestation. One


Among the important input factors of the processing process are agricultural and forestry raw materials with their own characteristics, different from the raw materials produced and supplied by the industrial sector as mentioned above. That means, this sector is considered both a related sector and an industry that produces raw materials to ensure the input of the agricultural and forestry processing industry. The last sector to consider is the trade sector, which solves the output of the agricultural and forestry processing industry. Whether or not the products of the agricultural and forestry processing industry can be consumed in the market, the level of marketization of the products depends on the development of this factor. Implementing and ensuring this condition, the process of expanded reproduction with the stages of production, circulation, exchange and consumption can be carried out.

The presence of related industries often leads to the formation of competitive industries. Related industries are industries in which enterprises can cooperate in production activities to create final products. These cooperation activities can take place in the fields of technology development, production, distribution, marketing or after-sales service. The existence of foreign related industries in the domestic market facilitates the exchange of information and technology. However, the existence of these foreign related industries can become a threat to existing domestic industries by creating new opportunities for penetration.

In addition, the development of this industry also depends on the development of service industries such as transportation, customs, insurance, health care...

1.3.4. Business strategy and competitive characteristics in the industry

This is a condition for the development of the agricultural and forestry processing industry that affects the competitive advantage of an industry or locality. This factor is the method of creating, organizing and managing a business as well as the competitive situation in the local market. There are three specific contents of this group, including:


First, the strategy and organizational structure of local enterprises. The competitive and management methods of an enterprise are often influenced by the characteristics of that locality. A country's industry will have a competitive advantage when its management methods and practices are consistent with the characteristics of the country and the competitiveness of the industry. Enterprise development strategy depends on management practices, the views of leaders, staff training, individual work views, customer relations, views on expanding markets abroad, and the relationship between labor and management. Enterprises will gain a national competitive advantage when they enter a market that requires management that is consistent with the organizational structure in the domestic market. Practice has proven the above point of view, for example, Italian enterprises with the organizational structure of small and medium-sized enterprises and family-based management methods cannot have a competitive advantage when entering the German market, an industrial market accustomed to a hierarchical organizational structure.

Second, the target factors. The goals of the country and enterprises motivate each citizen and each manager. The competitive advantage of each country depends on the efforts and goals of each enterprise and each individual: The goals of each enterprise depend on the ownership structure, the motivation of the owner and the management characteristics of the State. If there is unity in the goals of the State, enterprises and each individual, then that country will certainly gain a competitive advantage over other countries;

Third , the domestic competition factor. Many economists believe that domestic competition does not bring benefits to the country itself but only leads to limitations in competitive advantages compared to other countries because competition prevents the exploitation of economies of scale. However, in reality, there are few industries with competitive strengths in the international market that have not been and are facing fierce competition in the domestic market. Competition from the domestic market requires businesses to constantly innovate, improve technology, improve product and service quality, create many new products as well as have solutions to survive and succeed in the market. Competition in the domestic market


Not only does it create new advantages for businesses, it also reduces limitations. At the same time, these competitive experiences will help businesses compete in the international market. Competition requires the State to review policies and take measures to improve macro-management policies. Thereby enhancing the competitiveness of each country.

1.3.5. The element of change

In many practical cases, the success of a locality or a local industry is based on random factors. Random factors can be mentioned as new innovations in technology, earthquakes, tsunamis, etc. Random factors affect different localities differently, so each locality can limit the impact or take advantage of random factors to protect or enhance its competitive advantage. Random factors are understood in the sense that the above changes can both create opportunities and threats for localities, industries and businesses. Therefore, the ability to forecast and judge as well as respond of local governments, industries and businesses is important when considering and analyzing this condition.

1.3.6. The role of the State

The State can positively or negatively impact the above groups of conditions. The State, with its macro-management role, has a great impact on the development of the industry in general and the agricultural and forestry processing industry in particular. The State is the producer, the State is the largest consumer, the State is the investor and the State is also the largest borrower and lender. The State needs to perform functions such as orientation; creating environmental conditions, regulation and inspection. The State performs its management role through the application of objective laws, principles and general management methods.

Comment


Agree Privacy Policy *