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Foreign Direct Investment in Quang Ninh - 1

HANOI NATIONAL UNIVERSITY FACULTY OF ECONOMICS


NGUYEN VIET THONG


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Foreign Direct Investment in Quang Ninh


Foreign Direct Investment in Quang Ninh - 1

Master's thesis in ECONOMICS


Hanoi – 2006


HANOI NATIONAL UNIVERSITY FACULTY OF ECONOMICS


NGUYEN VIET THONG


Foreign Direct Investment in Quang Ninh


Code : 60.31.01

Master's thesis in ECONOMICS


Scientific supervisor : Dr. Nguyen Xuan Thien


Hanoi - 2006



1. Urgency of the topic

INTRODUCTION

Foreign direct investment is a very important factor promoting economic growth for developing countries in the world in general and Vietnam in particular. This activity has been making positive contributions to the cause of socio-economic development in Vietnam. After 19 years of promulgating the Law on Foreign Direct Investment (1987), Vietnam has achieved many successes in attracting FDI capital; Contributing to the restructuring of the economy towards industrialization and modernization of the country, opening a new era in the trend of regional and world economic integration of our country today.

Quang Ninh is a province with a favorable location, rich in resources, strongly developed industry, has Ha Long Bay - a world natural heritage, has border gates and international seaports, abundant inland waterway ports, and has high-quality human resources. This is a province located in the northern key economic triangle of Hanoi - Hai Phong.

- Quang Ninh, one of the most dynamically developing regions in the country. The Provincial Party Committee and Provincial People's Committee have clearly identified comparative advantages, international economic development trends and affirmed that attracting foreign direct investment is one of the important solutions for socio-economic development. Foreign direct investment attraction activities in recent times have contributed to Quang Ninh's average GDP growth rate of 12.75%, industrial and aquatic production value increased by an average of 7.85%, export turnover increased by an average of 35.05%, and total state budget revenue increased by an average of 21.95% per year.

Based on practice, the study of FDI in Quang Ninh becomes more urgent because:

- To increase attraction and improve the efficiency of using FDI capital in the coming years.

- Effectively exploit resources, contributing to promoting and developing the socio-economy of Quang Ninh province.


- Accelerate the industrialization and modernization in Quang Ninh in particular and the whole country in general.

- The reality shows that foreign direct investment attraction activities in Quang Ninh are not commensurate with the potential and advantages, and have not met the requirements of socio-economic development of the province. Therefore, research to promote foreign direct investment attraction in Quang Ninh is of great importance and urgency.

2. Research situation

Foreign direct investment is one of the issues that many economists are interested in and research. This is an issue that is always topical and never old. There have been many studies on the impact of FDI on economic development in Vietnam such as: Doctoral thesis in economics by author Hoang Thi Kim Thanh with the topic: "Solutions to improve the efficiency of foreign direct investment in the process of industrialization and modernization of the country" 2003. Doctoral thesis in economics by author Nguyen Xuan Thien with the topic: "Direct investment of Japan in ASEAN and some recommendations for Vietnam" 2002. However, the study of foreign direct investment in the locality, especially in Quang Ninh, has not had any systematic research topic. There are only a few articles published in the province's newspapers and magazines. Author Nguyen Duong with the article "Foreign direct investment and the operation of industrial parks", Quang Ninh Newspaper, No. 73, January 2005. Author Vu Nguyen Nhiem with the article: "Improving the efficiency of foreign direct investment, maximizing social resources for development", Quang Ninh Newspaper, No. 73, January 2005. In addition, the Provincial Party Committee and People's Committee of Quang Ninh have also studied the issue of attracting FDI and issued regulations on this issue such as: Decision No. 3467/2002/QD-UB dated September 30, 2002 of the People's Committee of Quang Ninh province on a number of mechanisms to encourage and ensure foreign direct investment, Decision No. 4047/2002/QD-UB dated November 11, 2002 of the People's Committee of Quang Ninh province on a number of mechanisms to encourage and ensure investment in industrial parks in Quang Ninh province.

The new articles only mention a small part, individual aspects of FDI, not placing the research problem in the context of the great influence of the process.


international economic integration, the effects of the state's macroeconomic policies. Therefore, the author believes that a systematic study and analysis of factors affecting FDI attraction in Quang Ninh is extremely necessary and should continue to make recommendations to increase the attraction and improve the efficiency of FDI capital in Quang Ninh.

3. Research purpose and tasks

3.1. Research purpose

Based on the analysis of the current situation of attracting and using foreign investment capital in Quang Ninh. The research topic aims at the following objectives:

- Prove the necessity of this capital flow for economic development

- society of Quang Ninh province.

- Point out the advantages and disadvantages of FDI attraction activities in Quang Nam.

Ninh.

- Propose some solutions to increase attraction and improve efficiency of use.

use of foreign direct investment in Quang Ninh in the coming time.

3.2. Research tasks

- Systematize theoretical and practical issues related to foreign direct investment.

- Provide a panoramic picture of foreign direct investment in Quang Ninh.

From there, propose solutions to promote positive aspects and overcome limitations.

4. Research object and scope

4.1. Research subjects

Within the framework of the master's thesis, the author focuses on researching, analyzing and evaluating the following main issues:

- Factors affecting the situation of attracting FDI capital flows into Quang Ninh.

- Current status of attracting and using FDI capital in Quang Ninh

- Impact of FDI on Socio-Economic Development of Quang Ninh.

4.2. Scope of research


* The topic focuses on studying the current status of FDI in Quang Ninh during the period from 1990 - 2005.

* Refers to some projects with large investment capital.


5. Research methods

During the research and practical survey to complete the topic, the author used a combination of popular scientific research methods such as:

General method: Dialectical materialism method and historical materialism method.

Specific methods: Comparative method, synthetic analysis method, historical and logical method, statistical method... to clarify the issues that need to be researched.

6. Expected contributions of the topic

- Clarifying and evaluating the current status of FDI in Quang Ninh

- Through analyzing the current status of attracting and using foreign direct investment in Quang Ninh in recent times to point out the positive impacts and limitations of this activity.

- Clarifying some factors affecting foreign direct investment activities in Quang Ninh.

- Propose some solutions to increase attraction and improve the efficiency of FDI use in Quang Ninh.

7. Thesis layout

In addition to the introduction, conclusion, and list of references, the thesis consists of the following three chapters:

Chapter 1: Some theoretical and practical issues on foreign direct investment

outside

Chapter 2: Current status of foreign direct investment activities in Quang Nam

Ninh in the past


Chapter 3: Orientation and solutions to promote attracting foreign direct investment in Quang Ninh in the coming time


CHAPTER 1

SOME THEORETICAL AND PRACTICAL ISSUES ON FOREIGN DIRECT INVESTMENT

1.1. THEORY OF FOREIGN DIRECT INVESTMENT (FDI)

1.1.1.Concept

Investment is the activity of investing capital in business, in order to gain more capital than the invested capital, through profit.

Due to its characteristic of generating benefits greater than costs, investment is one of the most important factors determining the growth and development of each country and each enterprise. With that role, investment activities have taken place very strongly, going beyond the national scope and becoming a basic content in international economic relations.

Foreign investment in general is an investment activity in which there is a movement of resources (capital, technology, management skills...) from one country to another to gain benefits on a global scale.

International relations on investment only appeared in the 19th century along with the transition from free competition capitalism to monopoly capitalism. V. Lenin pointed out that: "The typical feature of old capitalism, in which free competition completely dominated, was the export of goods. The typical feature of new capitalism, in which monopolies dominated, was the export of capital".

According to Lenin, capital export has two forms: Export of loan capital and export of operating capital. Export of loan capital is the form of government or


The private sector of one country lends capital to the government or private sector of another country. Exporting operating capital is the form of bringing capital abroad to build factories, carry out production of goods, including surplus value in the importing country.

In recent decades, the concept of foreign direct investment has been introduced by many international economic organizations with the aim of helping countries formulate macroeconomic policies on FDI, creating conditions to promote international trade and investment liberalization. The International Monetary Fund (IMF) has defined foreign direct investment as follows:

Foreign direct investment is an investment with long-term benefits of an enterprise in another country (hosting country), not in the country where the enterprise is operating (source country), with the purpose of effectively managing the enterprise.

The United Nations Conference on Trade and Development (UNCTAD) also defines foreign direct investment as follows:

Foreign direct investment is an investment involving a long-term relationship, interest and control by a legal entity or natural person (foreign direct investor or parent company) towards an enterprise in another economy (FDI enterprise or foreign branch or enterprise branch).

The United States is one of the largest investment recipients and investors in the world and also defines FDI as follows:

FDI is any capital flow that is majority owned by citizens or companies of the investing country, obtained from lending to or using to buy ownership of foreign enterprises.

Vietnam's view on FDI as stipulated in Clause 1, Article 2 of the Law on Foreign Investment amended and supplemented in 2000:

Foreign direct investment is the act of foreign investors bringing into Vietnam capital in cash or any assets to carry out investment activities in accordance with the provisions of this law.

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