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Framework for Analyzing Factors Determining Competitiveness


CHAPTER 2. HANOI'S FUNDAMENTAL COMPETITIVENESS


2.1. Framework for analyzing factors determining competitiveness


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Productivity and the growth rate of productivity are the decisive factors for NLCT. In which, productivity is measured by the added value created by a unit of labor (or capital) in a unit of time (Porter, 2008).

According to Porter (1990), there are three groups of factors that determine a country's competitiveness: (i) national natural advantages, (ii) macro competitiveness and (iii) micro competitiveness.

Figure 2.1 . Local level NLCT analysis framework



Source : Porter (1990) modified by Vu Thanh Tu Anh (2012).


Vu Thanh Tu Anh (2012) revised Porter's framework for analyzing local competitiveness. Accordingly, the fundamental factors that determine local productivity include three main groups. The first group "locally available advantages" includes natural resources, geographical location or local scale. The group "Competitive capacity at the local level"


includes factors that make up the business operating environment, including (1) the quality of social infrastructure, political institutions, law, culture, society, education, and health; (2) economic policy institutions such as fiscal policy, credit policy, and economic structure. The last group, "Competitiveness at the enterprise level", includes the quality of the business environment, the level of cluster development, and the operations and strategies of enterprises (Figure 2.1).

2.2. Group of natural advantage factors


2.2.1. Geographical location


Hanoi is located in the Northwest of the Red River Delta, bordering 8 provinces: to the North it borders Thai Nguyen and Vinh Phuc provinces; to the East it borders Bac Giang, Bac Ninh and Hung Yen provinces; to the West it borders Hoa Binh and Phu Tho provinces; to the South it borders Ha Nam and Hoa Binh provinces.

From Hanoi to the provinces and cities of the North as well as the whole country by road, rail, waterway and air. Hanoi has 2 civil airports, 5 railway lines to Ho Chi Minh City, Lang Son, Lao Cai, Hai Phong and Thai Nguyen. Hanoi also has an important position on the Vietnam - China economic corridor: Kunming - Lao Cai - Hanoi - Hai Phong and Nanning - Lang Son - Hanoi - Hai Phong.


Figure 2.2 . Map of Hanoi City



Source : Map Publishing House (2014).


2.2.2. Natural resources


The total land area of ​​the city is 332,452.4 hectares. Hanoi has a relatively diverse terrain including high mountains, low hills and plains. The high mountains are mainly concentrated in Ba Vi, which is also the area with the National Park.


Ba Vi National Park has an area of ​​about 1,200 hectares and has conditions for tourism development. Hanoi's climate is characterized by a tropical monsoon climate. Hanoi also has many large rivers flowing through it such as the Red River and the Da River. The city is also home to many large lakes such as West Lake, Hoan Kiem Lake, Ngai Son - Dong Mo, Suoi Hai, and Quan Son (see details in Appendix 4).

2.2.3. Local scale


As of 2013, Hanoi only occupies 1% of Vietnam's area but is 158.6% of Ho Chi Minh City's area. In terms of population, Hanoi accounts for 7.73% of the country's population and is 88.72% of Ho Chi Minh City's (General Statistics Office, 2013).

2.3. Competitiveness at the local level


2.3.1. Technical infrastructure serving tourism development


About traffic


Hanoi has a fairly complete transportation system combining roads, waterways, railways and airways. Roads are about 3,974 km long, with 73 bus routes, nearly 500 inter-provincial passenger routes, about 100 taxi companies with over 9,000 vehicles. The railway system is 90 km long. However, the railway infrastructure is old, outdated, and has not been invested in modernly, so the transportation of passengers and goods is still limited. The airways include Noi Bai airport (international, domestic), Gia Lam (combined military service flights), Bach Mai, Hoa Lac and Mieu Mon (all military airports). The waterways have a river system of different sizes with 9 river ports with warehouse systems and auxiliary works; 17 inland waterway wharves and 58 cross-river passenger wharves (see details in Appendix 5).

About electricity, information - telecommunications, water supply and drainage


Compared to the national average, Hanoi is provided with a fairly complete system of electricity, telecommunications, clean water, waste collection and treatment. However, due to the rapid growth in demand, the power supply and transmission system will find it difficult to meet the demand in the coming years and will face many risks when incidents occur. The city's telecommunications services have developed over the years.


developed rapidly, meeting the needs of the people and serving economic development. Regarding clean water supply, up to now, this system has only been provided mainly to inner-city districts, and the expansion of the clean water supply network has been very slow. The domestic waste collection system is organized quite comprehensively, however, wastewater treatment still relies on the natural drainage system, causing environmental pollution in rivers. In particular, waste treatment in concentrated industrial parks, craft villages, and suburban residential areas is still very spontaneous, causing environmental pollution (see details in Appendix 5).

2.3.2. Social infrastructure serving tourism development


Hanoi has a fairly complete and comprehensive network of educational and health facilities. The system of educational facilities ranges from kindergarten to university. The city has the advantage of being the place with the largest concentration of higher education and vocational training facilities in the North. The health system from the grassroots to the central level is also quite complete. However, due to the concentrated area, health facilities in the inner city are often overloaded. In recent years, the city has also had many weaknesses in urban management. The lack of planning, patchwork, fragmentation of investment and the ability to manage the city has not kept up with the pace of development have created a relatively shabby appearance of Hanoi. Social evils such as street vendors, soliciting customers, fraud, and traffic safety are still quite common (see details in Appendix 6).

2.3.3. Fiscal policy, investment, credit and economic structure


On average, during the period 2009 - 2013, Hanoi's economic growth rate was 9.4%/year. As of 2013, Hanoi's GDP (calculated at current prices) was 451,213 billion VND. This economic structure remained almost unchanged during the period 2008 - 2013. Regarding budget expenditure, regular expenditure always has a high proportion, especially in 2013, regular expenditure accounted for nearly 55% (see details in Appendix 7).

2.4. Enterprise-level competitiveness


2.4.1. Business environment

Although it is a large and central city of the country, for many years, Hanoi's provincial competitiveness index (PCI) has always been low or average and unstable. If in 2015


In 2011, Hanoi's PCI index ranked 36/63, but by 2012 it had dropped 15 places and was ranked 51/63. In 2013, Hanoi's PCI index reached 57.67 points, an increase of 4.27 points compared to 2012 and ranked 33/63 (up 18 places compared to 2012), in the group of good management quality (Hanoi People's Committee, 2013).

Although in recent years, Hanoi has issued many resolutions, programs and plans to improve the provincial PCI index, the results have been insignificant. The PCI index is closely linked to administrative reform, improving the investment environment, making state management agencies transparent and enhancing their operational capacity. This shows that in recent years, Hanoi has made very little improvement in these areas.

2.4.2. Development level of industry clusters


The transportation, warehousing and information and communication industry accounts for the largest proportion in the city's economy. Next is the processing industry, which accounts for the second largest proportion. The third largest group of industries are the construction and trade industries. Next are the transportation - warehousing, education, finance, agriculture, real estate and accommodation - catering industries.

The industries with high proportions compared to the whole country are administrative and support services, professional and scientific and technological services, construction and transportation - warehousing. The industries with fast proportion changes are transportation - warehousing and information and communication; administrative and support services, construction, culture - information and entertainment.

The tourism industry, including accommodation and food services, is the third largest industry group, with a growth rate of about 10% per year.


Figure 2.3: Economic sectors of Hanoi compared to the whole country



Source : Compiled from data from Vietnam Statistical Yearbook 2013 and Hanoi City.


2.4.3. Business operations and strategies


In the period 2006-2013, the number of enterprises in Hanoi increased rapidly at a rate of about 20% per year. Although the number of enterprises has grown rapidly over the years, the majority are still small and medium enterprises.

According to the General Statistics Office survey results in 2010, on average, a business has only 26 employees. According to the same survey results, a state-owned enterprise has an average of 476 employees, and a foreign-invested enterprise has an average of 143 employees. In general, businesses are mainly small-scale, with outdated technology, resulting in low business efficiency and low competitiveness.


CHAPTER 3. THE FORMATION OF HANOI TOURISM INDUSTRY CLUSTER


3.1. The formation of Hanoi tourism cluster


“A cluster is a geographical concentration of firms, suppliers, and related businesses, as well as companies in related industries and supporting institutions in a particular sector, that compete and cooperate with each other.”

(Porter 1990, 1998, 2008, quoted in Vu Thanh Tu Anh, 2011)


Thang Long – Hanoi has long been the economic, political, cultural and educational center of Vietnam. This city is home to many famous architectural, cultural and religious works such as the Temple of Literature – Quoc Tu Giam, One Pillar Pagoda, Quan Thanh Temple, Tran Quoc Pagoda, Kim Lien Communal House. In addition, this is also home to many bustling commercial streets (the 36-street area), traditional craft villages (bronze casting, pottery, etc.) and many famous traditional festivals.

However, tourism activities were only officially exploited and professionally organized since the French came in the colonial exploitation program in the 19th and early 20th centuries. The French at that time recognized the potential of cultural, historical, religious and scenic values ​​to organize tourism activities. Based on the existing strengths of the Thang Long - Hanoi land, they systematically carried out tourism exploitation activities: building cultural works (grand theater, Vietnam history museum), and facilities to serve tourists.

In addition, the French also designed attractive tours and promoted tourism such as organizing fairs and issuing stamps to promote tourism in Indochina. These activities helped Hanoi become an indispensable destination on the tourism map of Indochina.

From 1945 to 1960, in the context of war and Vietnam's difficult socio-economic conditions, tourism activities in Hanoi almost did not take place. Interest and tourism activities in the city only began to restart associated with the recovery of Vietnam's tourism industry in the early 1960s. However, during the period of 1960 - 1975,

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