Impact of foreign direct investment on socio-economic development of Vinh Phuc province

Analyze the specific impacts of foreign direct investment on economic development, solve social problems, protect the environment, point out the advantages and disadvantages, propose orientations and solutions to improve the effectiveness of FDI to accelerate the socio-economic development of Vinh Phuc province in a sustainable direction in the coming time.

2.2. Tasks

To achieve the above purpose, the tasks set out in the thesis are:

- Clearly explain the theoretical and practical basis of the impact of FDI on socio-economic development in the province in terms of positive and negative impacts.

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- Analyze the current status of FDI's impact on the socio-economic development of Vinh Phuc province in recent times, in which it is especially important to clarify the positive and negative impacts, the urgent issues that need to be resolved to promote the positive impacts and limit the negative impacts of FDI on the socio-economic development of Vinh Phuc province.

- Proposing directions and solutions to improve FDI efficiency

Socio-economic development in Vinh Phuc to 2020 and vision to 2030.

3. Research object and scope

3.1. Research subjects

The thesis has the research object is the impact of foreign direct investment on socio-economic development expressed through changes in aspects of socio-economic life such as economic growth, economic restructuring, employment, environment... under the influence of foreign direct investment. To clarify the research object, the thesis will discuss issues closely related to the impact of FDI on economic development.

- society such as the nature, characteristics, role of FDI, the relationship between FDI and socio-economic development in the province and related socio-economic relations.

3.2. Scope of research

- Regarding space: The thesis focuses on studying and evaluating the current status of FDI's impact on socio-economic development in Vinh Phuc province, including taking into account the adjustment of the province's administrative boundaries according to Resolution of the 12th National Assembly, 3rd session, No. 15/2008/NQ-QH12 dated May 29, 2008 "On adjusting the administrative boundaries of Hanoi city and some related provinces".

- Research period: The thesis analyzes and evaluates the current status of FDI impact on socio-economic development of Vinh Phuc province from 1997 to 2014 in terms of economy, society, and environment, in order to propose directions and solutions to effectively promote the impact of FDI on socio-economic development in Vinh Phuc province until 2020, with a vision to 2030.

4. Theoretical basis and research methods

4.1. The theoretical basis of the thesis is the viewpoint of Marxism-Leninism, Ho Chi Minh thought and the viewpoint of the Communist Party of Vietnam on opening and international economic integration, documents of the 7th, 8th, 9th, 10th, 11th Party Congresses and Central Conferences; Investment Law, Foreign Investment Law; at the same time, referring to and inheriting the research results of domestic and international organizations and scholars on foreign direct investment and the impact of FDI on socio-economic development in the province.

4.2. Research methods

The methodological basis of the thesis is dialectical materialism and historical materialism. The thesis mainly uses the following research methods: scientific abstraction; from abstract to concrete; systematic research method; synthesis, analysis, statistics, comparison, and at the same time combines the use of summary, analysis and practical methods to find out the characteristics of the research problem and the regularity of the research object. At the same time, specifically through the chapters:

Chapter 1: Using analytical research methods to evaluate the views of scholars and theoretical schools on the research issue, thereby

draw out well-researched issues and issues that need additional and new research.

Chapter 2: Using the scientific abstraction method to draw out basic concepts and discuss basic theoretical issues on the impact of FDI on socio-economic development in the province in Vietnam. At the same time, using the research method to evaluate the practice of attracting, using, and promoting the positive impact of FDI in some countries and localities in the country to draw lessons for Vinh Phuc province.

Chapter 3 : Using analytical, statistical and synthetic methods to clarify the specific impact of FDI on socio-economic development in Vinh Phuc province, drawing out positive results, negative impacts and causes.

Chapter 4: Using the method of generalizing the issues studied in chapters two and three together with the assessment and forecast of the context and demand for FDI capital for socio-economic development of Vinh Phuc province to draw out orientations and solutions to improve the effectiveness of FDI's impact on socio-economic development in Vinh Phuc.

5. New contributions of the thesis

- Explain the concept of the impact of FDI on socio-economic development; supplement and clarify the two-sided impact of FDI on socio-economic development in the province in terms of economy, society and environment.

- Analyze, evaluate and explain more clearly the specific impacts of FDI on the socio-economic development of Vinh Phuc province in the period of 1997 - 2014, including the positive impacts of FDI on economic growth, economic restructuring, production technology, infrastructure, foreign economic expansion, budget revenue, employment, environment and some negative impacts on economy, society, environment and the causes of those impacts.

- Propose key directions and solutions to effectively promote the impact of FDI on socio-economic development in Vinh Phuc province by 2020 and vision to 2030. Proposed solutions include:

Periodically evaluate the effectiveness of each project and the effectiveness of FDI on socio-economic development in Vinh Phuc to have timely adjustment programs; Continue to improve the work of planning for socio-economic development, planning for the development of economic sectors, planning for industrial zones and clusters until 2020 with a vision to 2030; Coordinate between localities and investors in building socio-economic infrastructure; Improve the effectiveness of investment promotion activities, select investment projects with the goal of socio-economic development; Develop human resources to meet the requirements of attracting and effectively using FDI for sustainable socio-economic development; Strengthen the leadership of the Party and the management of the State in increasing the attraction and improving the effectiveness of FDI in socio-economic development.

6. Practical significance of the thesis

The thesis contributes to raising awareness of the great and long-term role of FDI in the socio-economic development of the country in general and Vinh Phuc in particular. Proposes solutions to promote the attraction and effective use of FDI resources to serve the socio-economic development of Vinh Phuc in the coming time. The research results of the thesis can be a useful reference for research and policy-making agencies on FDI, and can be used as a reference for teaching economic topics on FDI in universities and graduate schools.

7. Structure of the thesis

In addition to the introduction, conclusion, list of references and appendices,

The thesis consists of 4 chapters and 11 sections.

CHAPTER 1

OVERVIEW OF RESEARCH RELATED TO THE IMPACT OF FOREIGN DIRECT INVESTMENT ON SOCIO-ECONOMIC DEVELOPMENT IN THE PROVINCE

1.1. OVERVIEW OF RESEARCH WORKS RELATED TO THE THESIS TOPIC

1.1.1. Foreign research works

Up to now, there have been many research works by foreign scholars and organizations on the issue of FDI and the impact of FDI on the socio-economic development of FDI importing countries and localities. Typical works in recent times include:

David O. Dapice's work, " Vietnam's Economy: Success Story or Bipolar Disorder? An Analysis of Strengths, Weaknesses, Opportunities and Threats" [24] , besides presenting positive impacts, mentioned a number of other effects of FDI on Vietnam's socio-economic development, expressed through the trend of concentrating investment in industries that create few jobs and are highly protected.

In the analysis of the Institute of International economics “ FDI in Developing Countries and Economies in Transition: Opportunities, Dangers, and New Changes” , (Foreign investment in developing countries and economies in transition: Opportunities, challenges, and innovations) [103], when analyzing FDI for developing countries, it pointed out the mixed impacts of FDI on the socio-economic development of the host country. From the analysis of some highlights of foreign investment in developing countries and economies in transition such as FDI has had remarkable growth since the 1990s, FDI foreign investment capital accounts for the largest proportion and is the most stable source of capital in private capital flows such as debt flows, commercial bank loans, bonds and other capital flows, the distribution of foreign investment capital to developing countries and economies

The transition is uneven, the issue of FDI impact has been raised.

to development, including:

Firstly, it creates additional financial flows from foreign investors, thereby creating strong competitive pressure in the FDI importing country.

Second, there is a negative impact on the market of the FDI importing country because foreign investors come from international markets where imperfect competition is taking place, thereby causing difficulties and challenges for enterprises of the FDI importing country.

Third, foreign direct investment (FDI) contributes to promoting domestic savings and providing additional efficiency in management, marketing, and technology to improve labor productivity.

Fourth, effective use of FDI promotes faster economic growth for the importing country. The relationship between FDI and economic growth (Maign Model of FDI and development) is demonstrated through the increase in production and business investment (SXKD) of foreign enterprises. Although FDI can have a clear, positive impact on the development of the host country, it can also create some negative impacts such as becoming a factor promoting the formation of oligopoly through the establishment and expansion of family-style enterprises, thereby narrowing the market entry ability of some enterprises of the host country.

Therefore, to promote the positive role of FDI, FDI importing countries not only need to have policies to increase FDI attraction, but also have proactive policies to orient FDI in an effective direction. The benefits and opportunities of foreign enterprises are control of technology, brand ownership, achieving economic scale through cooperation in investment and some other intangible assets received from foreign enterprises with expertise in management and organization. However, foreign enterprises also face risks and disadvantages in using domestic labor, being significantly influenced by local community relations, tastes and traditional culture in the receiving country.

The analysis of ROBERT E. LIPSEY and FREDRIK SJOHOLM, The Impact of Inward FDI on Host Countries: Why Such Different Answers? [117], mentioned many impacts of FDI on host countries. According to the authors, in general, foreign-invested enterprises can have access to higher technology, thereby improving the quality of products and services at lower prices, with higher productivity and resulting in higher consumer welfare. Another possibility is that foreign investment contributes to increasing the capital stock of the host country, while promoting the level of output.

With certain inevitable impacts on the economic growth of the host country, Carkovic and Levine [116] pointed out that no specific impact of FDI was clearly shown over a long period of time, for example, the survey in the period 1960 - 1995 and there were only some prominent but temporary impacts in a period of 5 consecutive years. There was no specific document indicating suitable variables containing the impact of FDI on economic growth.

Todo and Miyamoto’s study differs from other studies in that it describes FDI variables as an absolute number of FDI in a sector. They demonstrated that this measure is closely related to foreign stock markets and thus is preferred over their own shares in the industry. The results showed a positive impact of FDI on labor productivity in domestic enterprises after implementing market research management and workforce training.

The OECD-ILO Conference On Corporate Social Responsibility, Report: The Impact of Foreign Direct Investment On Wages And Working Conditions [107] reported that foreign direct investment has become the most dynamic sector of the world economy in recent decades. The global share of foreign direct investment increased from 8% in 1990 to 24% in 2006. The strong growth

This strong trend has been shaped by a number of qualitative changes. Although a large amount of foreign direct investment continues to flow into OECD countries, the importance of the linkages between non-OECD countries and foreign direct investment has been steadily increasing. The report has pointed out the positive impact of FDI on the economic and social development of developing countries, including:

First, FDI has become the main source of external finance for developing countries. Many non-OECD countries have also become effective foreign direct investors, as evidenced by the nearly doubling of their shares in global stock markets between 1990 and 2005.

Second, the growing importance of FDI in developing countries has opened up new expectations about the potential for shaping the development process in these countries, for example, that domestic economies can benefit from FDI through the creation of high-quality jobs, which pay higher wages and better working conditions than domestic firms. However, there is a significant and controversial uncertainty about whether foreign firms should in fact be considered a moderating factor in the increase in wages and the improvement of working conditions.

This paper summarizes some of the issues related to this issue, which is the first survey study on the labor market impacts of foreign direct investment and presents the results of this OECD study. Overall, the study shows that multinational enterprises (MNEs) tend to increase wages in the countries in which they invest. The positive wage impact tends to be concentrated among workers directly recruited by foreign enterprises. In addition, there is a small positive effect on the wages of domestic workers participating in the supply chains of these enterprises. The effects on increasing wages are stronger in developing countries than in developed countries, possibly because the technology gap between foreign and domestic enterprises is larger than that within the same country.

Impact of foreign direct investment on socio-economic development of Vinh Phuc province - 2

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