The role of the state in industrialization and modernization in Taiwan during the international economic integration period 1961-2003 - Lessons learned and the possibility of application to Vietnam

+ The State needs to support SMEs to seek and expand markets both domestically and internationally.

+ Encourage the creation of links between large enterprises and SMEs to complement and support each other.

+ Encourage the development of craft villages; encourage industrial and service businesses in rural areas.

Encouraging the development of SMEs will contribute to accelerating the pace of industrialization and modernization, while creating conditions to solve social problems and transform the economic and labor structure towards industrialization.

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- In addition, continuing to implement policies to link economic growth with social progress and equity; creating opportunities for all people to find jobs, increase income through enhancing and improving the quality of education and training; increasing social welfare for all classes of people is also aimed at democratizing economic and social life, creating motivation to mobilize resources for industrialization and modernization.

To solve the above problems, there must be breakthroughs in administrative reform so that the reform takes place more deeply and thoroughly. From there, a service state apparatus must be established to strongly support the economic development of the social community. In addition, in the state management system, it is necessary to promote more decentralization of economic power to local governments. The central government mainly focuses on strategic orientation, macroeconomic stability and foreign economic development in an open economy. On that basis, localities will better promote their initiative in investment and development, and use their resources reasonably and effectively.

3.3.3. Diversification policy in capital mobilization for industrialization and modernization

The issue of capital mobilization for development investment holds a particularly important position in industrialization, modernization and the planning of capital mobilization policies in the economy.

The market has a direct impact on socio-economic development. In fact, capital for development investment depends largely on the economic policies of the state. For a developing economy in the process of industrialization and modernization, on the one hand, the state's policies need to aim at encouraging domestic investment, on the other hand, there must be policies to stimulate the flow of investment capital from outside.

Taiwan's experience shows that to successfully implement industrialization, it is necessary to have a capital creation strategy, appropriate policies and solutions to mobilize all capital sources for development investment and especially to liberalize investment and financial flows. In addition, it is necessary to reasonably resolve the correlation between domestic capital and foreign capital. Capital accumulated from within the economy plays a very important role in economic development because external support and supplementation, whether borrowing, aid or foreign investment, is only temporary. ODA capital or loans must eventually be repaid. FDI capital is also only a supplementary source and moreover, there must always be domestic counterpart capital to create conditions for effective implementation of external capital.

Entering the stage of accelerating industrialization and modernization, Vietnam's demand for investment capital will increase. According to economists, the capital in the population is still very large and has not been exploited or mobilized. The reason is partly because the financial system in our country still has many limitations, investment incentive policies still have many shortcomings, and investment activities from the budget are still ineffective. Moreover, when Vietnam completes its accession to the WTO, the opportunity to access large capital sources from abroad will become increasingly evident. With the trend of liberalizing the movement of resources, the flow of capital will be directed to where they have the conditions to maximize their effectiveness and generate the most profit. That shows that the most important issue is to have the right policy to attract capital from outside. To do so, the prerequisite is to liberalize the channels of capital circulation into Vietnam. However, it is also necessary to realize that, freeing

The diversification of capital circulation channels contains unpredictable risks, especially when our country's financial and monetary system still has many limitations and has not yet established a solid structure.

In short, the State must really attach importance to the issue of capital mobilization for development investment, in which it must adhere to the viewpoint that domestic capital is decisive and foreign capital is important. Domestic capital not only plays a decisive role in the long term but is also an indispensable condition for attracting and effectively using external capital. Specifically:

- With domestic capital:

First of all, the state needs to continue to innovate the budget management mechanism:

+ Reform tax policy towards encouraging investment in production and business development, nurturing revenue sources; expanding the scope and taxpayers. Reducing the backlog of state budget revenue, limiting and ending the phenomenon of appropriation of budget revenue.

+ Issuance of government bonds in domestic and foreign markets and issuance of local bonds also need to be encouraged to mobilize idle capital from all classes of people for development investment.

+ Recently, the policy of equitization of state-owned enterprises has been effective in attracting a large amount of capital from private investors and foreign investors. However, reality shows that there are still many shortcomings, especially in the process of equitization of large-scale state-owned enterprises. Therefore, the state needs to continue to research and perfect the system of legal documents on equitization such as the issue of enterprise valuation, the issue of determining charter capital, foreign strategic shareholders, etc. to improve the effectiveness of equitization of state-owned enterprises in the spirit of both collecting capital for the state budget and creating conditions for enterprises to have more capital for investment and development.

+ The State needs to have clear and transparent mechanisms and policies to effectively use investment capital from the State budget to avoid the phenomenon of scattered and wasteful investment, especially in basic construction investment. In the immediate future, it is necessary to review and have policies and measures to promptly handle projects and works using State budget capital that are behind schedule, take too long, are ineffective or lack convincing economic and technical arguments.

Second, in addition to policies to encourage private investment, the state needs to focus on innovating monetary policies and developing the financial system to increase the domestic savings rate and stimulate investment and development. Specifically:

+ The State has policies to build and develop the financial market, and at the same time create basic premises for this market to operate according to the principle of healthy competition.

+ Build and develop medium and long-term capital markets by establishing, encouraging and supporting non-bank credit institutions such as finance companies, investment funds... and developing the stock market.

+ Enhance the management capacity of the State Bank through the flexible and effective use of monetary policy tools, while creating the necessary conditions to continue liberalizing interest rates, increasing foreign exchange reserves, and forming a synchronous legal framework for credit activities. In particular, the State Bank needs to have flexible mechanisms and policies capable of controlling inflation to create conditions for sustainable development.

- With foreign capital:

First of all, it is necessary to continue to focus on attracting FDI. In the context of our country having surplus labor, lack of jobs, and low level of science and technology, the state needs to orient and plan strategies to attract FDI in each economic sector and each economic sector. In the past, many problems still arise in attracting FDI to Vietnam. Therefore, Vietnam needs to have solutions.

To become stronger and more attractive to foreign investors, it is important to actively improve the investment environment:

+ Complete the law, simplify administrative procedures and ensure strict, consistent implementation, and good implementation of tax and credit incentives for investment partners. In fact, our State has made strong innovations in licensing foreign-invested investment projects by allowing provincial authorities to license certain specific projects. In particular, the promulgation of the Investment Law (2005) has eliminated the distinction between investment activities of domestic and foreign investors, but in reality, in some localities there are still many inconsistent policies and barriers to investment activities of foreign investors. Therefore, the Government needs to direct and inspect the implementation of laws and regulations of the State, ministries and branches in state management activities of foreign-invested areas in localities to take timely corrective measures.

+ Pay more attention to the project implementation process, increase the ratio of investment capital put into implementation. In fact, in Vietnam, foreign investment attraction has made a breakthrough in recent times, especially after Vietnam joined the WTO. However, the ratio of investment capital implemented is still quite limited (in 2007, this ratio was only about 30%). The reason for this situation is that Vietnam still lacks many factors, both in terms of procedures and especially inadequacies in infrastructure, shortage of technical and management human resources. Therefore, the State needs to have policies and solutions to overcome these limitations in order to increase the ratio of implemented capital to registered capital.

+ Innovation in investment promotion. Currently, when competition among countries in attracting FDI is becoming increasingly fierce, investment promotion activities are becoming increasingly important. Therefore, the State needs to continue to expand and develop investment promotion activities, strengthen the introduction and promotion of potentials, favorable policy environment, and investment opportunities for investors.

abroad… through the system of state agencies abroad and through the world's media system.

In the long term, Vietnam's FDI attraction goals and policies need to be adjusted in the direction of encouraging high-tech FDI projects, exploiting high-level comparative advantages, controlling and limiting FDI projects that purely focus on exploiting the inherent advantages of cheap labor, local consumption markets and causing environmental pollution in order to contribute to the economic restructuring towards modernization. Thus, attracting FDI from the world's leading TNCs is an extremely important orientation that needs special attention.

In addition to attracting FDI, the state needs to have policies and measures to take advantage of ODA and preferential loans from international economic organizations and governments of countries. At the same time, it is necessary to create mechanisms and policies to increase the speed of disbursement and improve the efficiency of using this capital source, avoiding waste. However, the state needs to orient the use of aid as a source of support for growth and development. Aid priorities need to be directed towards economic growth, first of all to meet the most important current needs. ODA capital needs to be used as a measure to promote exports, investment and savings, limiting the import of goods that are and can be produced domestically.

The Vietnamese stock market has only been established and developed in recent years, but has grown strongly and attracted a large amount of indirect foreign investment capital. The State needs to continue to research and adjust policies to create conditions for this capital source to be realized in the stock market and have policies to manage the activities of foreign investors to ensure the principle of stable and sustainable stock market development and minimize the negative consequences of foreign investment capital flows through stocks and bonds.

In addition to the above solutions, the most important issue that determines the success and effectiveness of the capital mobilization policy is the need to develop and strengthen the financial and banking system. Having a strong financial structure will create conditions for taking decisive steps in the process of liberalizing investment and financial flows.

3.3.4. Focus on developing science and technology to encourage and accelerate the application of technological advances and improve the national technological level.

Taiwan's experience shows that narrowing the gap with developed countries and effectively participating in the international division of labor can only be achieved through enhancing national technological capacity through the path of importing, accessing, mastering technology and moving towards self-creation of new technology. This depends largely on the state's science and technology development policy.

In fact, Vietnam's economic growth depends largely on input factors (capital and labor), which are limited resources. Meanwhile, for productivity factors, in addition to the contribution of mechanisms and policies, the role of science and technology is very important. Therefore:

- The State needs to continue to innovate and improve science and technology development policies, create a favorable institutional environment for innovation activities and improve technological levels to promote industrialization and modernization. Specifically:

+ State management agencies on science and technology need to specify and institutionalize the Science and Technology Development Strategy. Build a legal corridor suitable to new conditions with the requirement of creating the most favorable conditions for the development of science and technology.

+ The State needs to create more favorable conditions for enterprises to be proactive in technological innovation activities. The role of the State is not only to set out legal frameworks but also to perform the function of defining

direction and control of scientific and technological products when put into production because it is related to other socio-economic issues such as ecology, environment, intellectual property rights...

+ Strongly innovate the management and organization of science and technology activities; Need to quickly complete mechanisms and policies to transfer science and technology organizations to autonomy. In particular, pay special attention to two major issues: finance and human resources; Need to have support policies for high technology application, for applied research to contribute to socio-economic development.

+ Quickly build and perfect the technology market in Vietnam. To do that, it is necessary to soon perfect the legal system on the science and technology market; resolutely protect intellectual property, have sanctions to strictly handle violations of intellectual property law; protect and encourage the use of new solutions and inventions. Strengthen the state management capacity in the field of intellectual property.

- In the policy of science and technology development, it is also necessary to pay attention to a very important issue: the role of TNCs. In reality, it is not the government or universities but TNCs that play the most important role as a source of knowledge and technology for economies. Investment activities of TNCs are often associated with the transfer of knowledge and technology, with the highest level of management and access to international markets. Therefore, Vietnam needs to pay special attention to attracting investment from TNCs, and consider it a strategic policy, a fundamental way to quickly improve the level of technology and national competitiveness.

3.3.5. Innovation in human resource development policy

In industrialization and modernization, the requirement to transform the economic structure and labor structure requires a skilled and qualified labor force. Taiwan's experience shows that human resources are one of the most important factors.