Why the Private Sector Under Invests in Innovation

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RISK MITIGATION IN PROJECT FINANCING IN VIETNAM: FROM LENDERS’ PERSPECTIVES IN THE PRIVATE SECTOR by Duong Nhu Hung A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration Examination Committee : Prof. J.P. Gupta (Chairman) Dr. D.B. Khang Dr. S. Venkatesh Nationality : Vietnamese Previous Degree(s) : Master of Electrical Engineering Technical University of Budapest Hungary Scholarship Donor : The Government of Switzerland Asian Institute of Technology School of Management Bangkok, Thailand April 1999 Acknowledgement During the process of this research study, many persons and institutions whose involvement made this research possible. I would like to extend my appreciation and gratitude to all of them. I am very grateful to Prof. J. P. Gupta for his guidance, help and encouragement in assisting this research. It was he who introduced me to the field of Project Financing and I am very proud to have worked with him. I am also grateful to Dr. Do Ba Khang and Dr. S. Venkatesh, for having served as the committee members. They provided me with valuable suggestions to enhance the quality of this research. Outstanding acknowledgements are due to the government of Switzerland for providing the scholarship that enabled me to achieve the degree of MBA at the School of Management. I also wish to acknowledge the Industrial School of Management for providing support during my study. Thanks are also due to Mr. Ngo Quang Kim, Mr. P. U. Nguyen (HIFU), Mr. N. H. Dung (Energy Center), Mr. P. H. Nam (State Bank of Vietnam), Mr. V. D. H. Quan (AIT) and Miss N. T. M Hue (FPT). This research is dedicated to my parents whose continual encouragement, moral support, and inspirations have molded me into what I am now. Abstract The applications of project financing are increasingly wide spreading, particularly in investments that require risk sharing. Risk mitigation is one of the most important elements in project financing, but is not well addressed in literature in Vietnam. This research attempts to help lenders to mitigate risks in project financing in Vietnam. By conducting interviews with bankers, project managers, government authorities and legal experts, we analyze various aspects of risk mitigation at three levels: country, institution and project levels. The analysis is focused on the applications and limitations of risk mitigating techniques particularly at the project level. An in-depth risk analysis is carried out in a real life project. Our research suggests lenders to examine every risk separately and use overlapped protections. The predictability of the cash flow and the track records of the sponsors are the most important criteria in project financing. Joining syndication with multilateral organizations such as IFC is a wise way to mitigate risk. Joint Venture between an experienced foreign company and an influential state owned company is the most Why the Private Sector Under Invests in Innovation Why the Private Sector Under Invests in Innovation By: OpenStaxCollege Market competition can provide an incentive for discovering new technology because a firm can earn higher profits by finding a way to produce products more cheaply or to create products with characteristics consumers want As Gregory Lee, CEO of Samsung said, “Relentless pursuit of new innovation is the key principle of our business and enables consumers to discover a world of possibilities with technology.” An innovative firm knows that it will usually have a temporary edge over its competitors and thus an ability to earn above-normal profits before competitors can catch up In certain cases, however, competition can discourage new technology, especially when other firms can quickly copy a new idea Consider a pharmaceutical firm deciding to develop a new drug On average, it can cost $800 million and take more than a decade to discover a new drug, perform the necessary safety tests, and bring the drug to market If the research and development (R&D) effort fails—and every R&D project has some chance of failure—then the firm will suffer losses and could even be driven out of business If the project succeeds, then the firm’s competitors may figure out ways of adapting and copying the underlying idea, but without having to pay the costs themselves As a result, the innovative company will bear the much higher costs of the R&D and will enjoy at best only a small, temporary advantage over the competition Many inventors over the years have discovered that their inventions brought them less profit than they might have reasonably expected • Eli Whitney (1765–1825) invented the cotton gin, but then southern cotton planters built their own seed-separating devices with a few minor changes in Whitney’s design When Whitney sued, he found that the courts in southern states would not uphold his patent rights • Thomas Edison (1847–1931) still holds the record for most patents granted to an individual His first invention was an automatic vote counter, and despite the social benefits, he could not find a government that wanted to buy it • Gordon Gould came up with the idea behind the laser in 1957 He put off applying for a patent and, by the time he did apply, other scientists had laser 1/9 Why the Private Sector Under Invests in Innovation inventions of their own A lengthy legal battle resulted, in which Gould spent $100,000 on lawyers, before he eventually received a patent for the laser in 1977 Compared to the enormous social benefits of the laser, Gould received relatively little financial reward A variety of studies by economists have found that the original inventor receives onethird to one-half of the total economic benefits from innovations, while other businesses and new product users receive the rest The Positive Externalities of New Technology Will private firms in a market economy under invest in research and technology? If a firm builds a factory or buys a piece of equipment, the firm receives all the economic benefits that result from the investments However, when a firm invests in new technology, the private benefits, or profits, that the firm receives are only a portion of the overall social benefits The social benefits of an innovation take into account the value of all the positive externalities of the new idea or product, whether enjoyed by other companies or society as a whole, as well as the private benefits received by the firm that developed the new technology As you learned in Environmental Protection and Negative Externalities, positive externalities are beneficial spillovers to a third party, or parties Consider the example of the Big Drug Company, which is planning its R&D budget for the next year Economists and scientists working for Big Drug have compiled a list of potential research and development projects and estimated rates of return (The rate of return is the estimated payoff from the project.) [link] shows how the calculations work The downward-sloping DPrivate curve represents the firm’s demand for financial capital and reflects the company’s willingness to borrow to finance research and development projects at various interest rates Suppose that this firm’s investment in research and development creates a spillover benefit to other firms and households After all, new innovations often spark other creative endeavors that society also values If we add the spillover benefits society enjoys to the firm’s private demand for financial capital, we can draw DSocial that lies above DPrivate If there was a way for the firm to fully monopolize those social benefits by somehow making them unavailable to the rest of us, the firm’s private demand curve would be the same as society’s demand curve According to [link] and [link], if the going rate of interest on borrowing is 8%, and the company can receive the private benefits of innovation only, then the company would finance $30 million ...1 Prepared by Asian Tiger Capital Partners Prepared for the International Finance Corporation September, 2010 A Strategy to Engage th e Private Sector in Climate Change Adaptation in Bangladesh in Bangladesh 2 Table Of Contents Executive Summary 3 Overview 6 Defining the adaptation deficit 9 The Potential Role of the IFC in Engaging the Private Sector in Climate Change Adaptation 17 Purpose of the Report 20 Assessment Methods/Stakeholder Consultations 21 Implications and Consequences of Climate Change for Bangladesh 22 Climate Change Adaptation as a Source of National/Corporate Competitiveness 25 Climate Change and Agricultural Sector Opportunities 26 Climate Change, Water Management and Disaster Defences 29 Climate Change and the Insurance Sector 32 Case Study on Crop Insurance in India 34 Potential Strategies to Engage the Private Sector in Climate Change Adaptation 35 Knowledge: Improving the link between CC Science and Commercial Opportunities 35 Learning from Global and Regional Success Stories 35 Outsourcing R&D in CC Adaptation 36 Consulting /TA resources to develop institutional capacity on CC issues in the private sector 37 Concessional Financing for CC Projects 37 Grants and Concessional Loans 37 Equity Financing through a BD Cleantech Fund 38 Appendix 1: The Global Backdrop to Climate Change Adaptation Challenges 41 Appendix 2: The Bangladesh Climate Change Action Plan 44 Appendix 3 – Flood Vulnerability in Bangladesh 46 References 47 Disclaimer: "This publication may contain advice, opinions, and statements of various information providers and content providers. IFC does not represent or endorse the accuracy or reliability of any advice, opinion, statement or other information provided by any information provider or content provider, or any user of this publication or other person or entity." 3 Executive Summary As noted in the Bangladesh Climate Change Strategy and Action Plan, the combination of frequent natural disasters, high population density, poor infrastructure and low resilience to economic shocks, makes Bangladesh especially vulnerable to climatic risks. The high incidence of poverty and heavy reliance of poor people on agriculture and natural resources increases their vulnerability to climate change. The Government of Bangladesh (GOB) with the support of the major donor agencies has outlined a comprehensive strategy on tackling climate change. The effort has been spear-headed by a climate change cell set up within the Ministry of Environment and Forests. On a global basis, while Adaptation is still seen as more of a public sector focus than mitigation, some increased focus has been evident. The private sector should also be seen as a “supplier of innovative goods and services”. There is a clear need to meet the adaptation priorities of developing countries with expertise in technology and service delivery. The private sector has particular competencies which can make a unique contribution to adaptation, through innovative technology, design of resilient infrastructure, development and implementation of improved information This PDF document was made available from www.rand.org as a public service of the RAND Corporation. 6 Jump down to document Visit RAND at www.rand.org Explore RAND National Defense Research Institute RAND Health View document details This document and trademark(s) contained herein are protected by law as indicated in a notice appearing later in this work. 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RAND monographs present major research findings that address the challenges facing the public and private sectors. All RAND mono- graphs undergo rigorous peer review to ensure high standards for research quality and objectivity. Pharmacy Use and Costs in Employer-Provided Health Plans Insights for TRICARE Benefit Design from the Private Sector Geoffrey Joyce Jesse D. Malkin Jennifer Pace Approved for public release; distribution unlimited Prepared for the Office of the Secretary of Defense The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. R ® is a registered trademark. © Copyright 2005 RAND Corporation All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from RAND. Published 2005 by the RAND Corporation 1776 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138 1200 South Hayes Street, Arlington, VA 22202-5050 201 North Craig Street, Suite 202, Pittsburgh, PA 15213-1516 RAND URL: http://www.rand.org/ To order RAND documents or to obtain additional information, contact Distribution Services: Telephone: (310) 451-7002; Fax: (310) 451-6915; Email: order@rand.org Library of Congress Cataloging-in-Publication Data Joyce, Geoffrey. Pharmacy use and costs in employer-provided health plans : insights for TRICARE benefit design from the private sector / Geoffrey Joyce, Jesse D. Malkin, Jennifer Pace. p. cm. Includes bibliographical references. “MG-154.” ISBN 0-8330-3549-5 (pbk. : alk. paper) 1. Pharmacy, Military—United States. 2. Insurance, Pharmaceutical services— United States. 3. United States—Armed Forces—Medical care. 4. Veterans—Medical care—United States—Periodicals. 5. Retired military personnel—Medical care— United States. 6. Military dependents—Medical care—United States. 7. Drugs— Prices—United States. I. Malkin, Jesse D., 1969- II. Pace, Teaching English in Vietnam: Improving the Provision in the Private Sector A thesis submitted to The School of Education Faculty of Human Development Victoria University in fulfilment of the requirements for the degree of Doctor of Philosophy by Son Thanh Le 2011 TABLE OF CONTENTS Chapter headings I Statement of authorship IX Acknowledgements X List of abbreviations XII List of tables XIII List of figures XV List of charts XV Abstract XVI CHAPTER HEADINGS CHAPTER – INTRODUCTION P.1 1.1. Need for policy change in English language teaching and learning in Vietnam P.2 1.2. Research question P.7 1.3. Contribution to knowledge P.8 1.4. Statement of significance P.8 1.5. Summary of chapter P.9 CHAPTER - LITERATURE REVIEW P.10 2.1. Communicative Language Teaching P.11 2.1.1. The roles of teachers and learners P.15 2.1.2. Students’ motivation P.19 2.1.3. The roles of teaching materials P.20 2.2. English in Asian countries P.22 2.2.1. Role of English in Asia P.22 2.2.2. Levels of CLT in Asian countries P.24 Son Thanh LE I 2.3. English language teaching (ELT) in Vietnam 2.3.1. Historical factors P.32 P.32 2.3.1.1. From pre-modern time to 1945 P.32 2.3.1.2. From 1945 to 1975 P.33 2.3.1.3. From 1975 to 1986 P.34 2.3.1.4. From 1986 up to present P.35 2.3.2. Overview of English teaching and learning in Vietnam P.37 2.3.3. Communicative language teaching in Vietnam P.39 2.4. Summary of chapter CHAPTER – METHODOLOGY P.45 P.47 3.1. Objective P.47 3.2. Data collection procedure P.49 3.2.1. Document reviews P.51 3.2.2. Questionnaires for students P.51 3.2.3. Interviews P.52 3.2.3.1. Interviews with teachers P.52 3.2.3.2. Interviews with managers P.53 3.2.4. Classroom observations P.53 3.3. Draft ideal English centre P.53 3.4. Panel of Experts P.54 3.5. Redrafted ideal English centre P.54 3.6. Summary of chapter P.54 CHAPTER - FIELD TRIP DESCRIPTIONS 4.1. Case study P.56 P.56 4.1.1. General introduction P.56 4.1.2. Participants P.57 4.1.3. Student questionnaire P.57 4.1.4. Interviews with teachers and manager P.58 4.1.4.1. Reading teacher interview Son Thanh LE P.58 II 4.1.4.2. Writing teacher interview P.59 4.1.4.3. Manager interview P.60 4.1.5. Classroom observations P.61 4.1.5.1. Reading classroom observation P.61 4.1.5.2. Writing classroom observation P.63 4.2. Case study P.64 4.2.1. General introduction P.64 4.2.2. Participants P.65 4.2.3. Student questionnaire P.65 4.2.4. Teacher and manager interviews P.66 4.2.4.1. Reading teacher interview P.66 4.2.4.2. Grammar teacher interview P.68 4.2.4.3. Manager interview P.69 4.2.5. Classroom observations P.69 4.2.5.1. Reading classroom observation P.70 4.2.5.2. Grammar classroom observation P.71 4.3. Case study P.74 4.3.1. General introduction P.74 4.3.2. Participants P.75 4.3.3. Student questionnaire P.75 4.3.4. Teacher and manager interviews P.75 4.3.4.1. Listening teacher interview P.76 4.3.4.2. Speaking teacher interview P.76 4.3.4.3. Manager interview P.77 4.3.5. Classroom observations P.78 4.3.5.1. Listening classroom observation P.79 4.3.5.2. Speaking classroom observation P.80 4.4. Summary of chapter Son Thanh LE P.81 III CHAPTER - DATA ANALYSIS 5.1. Case Study P.82 P.82 5.1.1. Student questionnaire P.82 5.1.2. Teacher interviews P.92 5.1.3. Manager interview P.94 5.1.4. Classroom observations P.95 5.1.5. Students’ reasons for learning English P.99 5.1.6. Teaching methods used in the centre P.99 5.1.7. Students’ perceptions of the kind of language teaching needed P.101 5.1.8. Teachers’ perceptions of how best to assist students P.102 5.1.9. Extent to which communicative language teaching approaches are valued and used in the classrooms P.103 5.1.10. Changes needed for communicative approaches rather than grammar-translation methods to become the norm P.104 5.1.11. Other improvements the private centre ... Why the Private Sector Under Invests in Innovation Positive Externalities and Technology Big Drug faces a cost of borrowing of 8% If the firm receives only the private benefits of investing in. .. curve According to [link] and [link], if the going rate of interest on borrowing is 8%, and the company can receive the private benefits of innovation only, then the company would finance $30... and the firm can capture the 5% return to society, the firm would invest as if its effective rate of return is 4%, so it will invest $183 million 7/9 Why the Private Sector Under Invests in Innovation