TÓM tắt TIẾNG ANH tác động của đầu tư trực tiếp nước ngoài đến phát triển kinh tế xã hội nghiên cứu trường hợp tỉnh hải dương

INTRODUCTION Necessity of research topic Globalization and international economic integration are indispensable trend, the international and regional FDI movements are flexible in developing countries and emerging economies at high levels Regional and international competition for high-quality FDI has been intensified With regard to Hai Duong province within the allowed framework, it is necessary to have a policy mechanism, strategy and solutions with foreign direct investment, in order to serve socio-economic development objectives of the province in the next stage Therefore, Hai Duong needs to study, analyze and evaluate impact of FDI on socio-economic development of the province in the past comprehensively, objectively and systematically to adjust the policy mechanism, strategy and appropriate solutions for FDI in a synchronous way to attract and use capital source of most effectively for the purpose of growth model innovation, restructure the economy of Hai Duong in the direction of fast and sustainable development, implement the economic development strategy of Hai Duong sucessfully in the future That would require a systematic study of the impact of FDI on the socio-economic development of Hai Duong Therefore, the author chooses the topic: "The impact of foreign direct investment on socio-economic development - Research the case in Hai Duong province" that is for the theoretical and practical implications for FDI of Hai Duong in the context of Globalization and International Economic Integration Research objectives and questions 2.1 Research objectives - The system explains for theoretical issues on the nature, characteristics, mechanisms and impacts of FDI on local socio-economic development - Analyse, evaluate the actual status, at the same time, test impact of FDI on the socio-economic development targets of Hai Duong province in the period of 1997 - 2016 - Propose measures to increase the positive impact, limit the negative impact of FDI on socio-economic development of Hai Duong by 2025 with a vision to 2030 2.2 Research questions Firstly, how is the mechanism and impact of FDI on local socio-economic development assessed? Secondly, how is the impact of FDI on the socio-economic development targets of Hai Duong province during the period from 1997 to 2016? Thirdly, with the goal of socio-economic development of Hai Duong province to 2025, the vision to 2030 and the impact of FDI on socio-economic development targets of the province in the past time, Hai Duong should continue to attract FDI or are not? If so, what level of attraction should focus on which industry, in which area in the province? Fourthly, what are the solutions to enhance the positive impact and limit the negative impact of FDI on socio-economic development of Hai Duong province in the coming time? Research object and scope 3.1 Research object The theoretical and practical implications on impacts of of foreign direct investment on local socio-economic development are research object of the Thesis 3.2 Research scope Space scope: Practical data researches on the impact of FDI on socio-economic development collected from Hai Duong province Time scope: The Topic of the Thesis is based on the practical data of Hai Duong province from 1997 to 2016, proposed solutions will be applied until 2025 with a vision to 2030 Content scope: To assess the level of socio-economic development of each country as well as each locality, including a number of different targets (both aggregated targets and specialized targets) To determine the assessment targets of local socioeconomic development in the study of the thesis, the author based on a common approach reflecting the level of socio-economic development of each country as well as each locality and is often used to compare the level of socio-economic development between each country as well as each locality in a country in a given period Thus, for the limit of research scope on the impact content of FDI, the author selected targets including: Gross Regional Domestic Product (GRDP), Human Development Index (HDI), economic structure, urbanization, production technology, efficiency of social investment capital, trade openness, employment and environment Research Methods The thesis has systematic, theoretical explanations of local socio-economic development, theoretical issues on the nature, characteristics, forms, mechanisms and impacts of FDI on local socio-economic development in international economic integration on targets: economic growth, human development index (HDI), economic restructuring, urbanization, production technology, efficiency of social investment capital, import and export, employment and environment Procedures and methods for collecting and processing actual data on FDI and socio-economic development targets of Hai Duong province of the thesis are conducted as follows: 4.1 Method of data collection Within the scope of the topic research, the thesis uses secondary data To collect secondary data, the author collects and aggregates data on FDI, GRDP, budget revenue, labor, income, human development index (HDI), economic structure, urban population, investment capital for labor, efficiency of social investment capital, import and export and environment at the departments, industries, industrial zones of Hai Duong province in the period from 1997 to 2016 The origin of the documents is clearly annotated 4.2 Data analysis method 4.2.1 Qualitative analysis method From the practical data on the socio-economic development targets of Hai Duong province in the period of 1997 - 2016, the author use the following methods to conduct the analysis: (1) Descriptive statistics method Being a research describing the relationship between FDI and socio-economic development targets by statistical tables, types of mathematical graphs, data collected This method is used to calculate and evaluate the results collected from the secondary data (2) Methods of comparative analysis, synthesis Data processing to calculate targets of relative numbers as well as absolute numbers to indicate the volatility trend of the study phenomenon This method is used to compare and assess the status of the relationship between FDI and socio-economic development targets of Hai Duong province from 1997 to 2016 4.2.2 Quantitative analysis methods The author has used the Autoregressive Distributed Lag (ARDL) model, the ARDL method by Pesasan et al (2001) has several advantages Firstly, in the case of small sample quantities, the ARDL model is a more statistically significant approach than to verify cohesion; Secondly, the ARDL method does not estimate the system of equations; instead, it only estimates a single equation; Thirdly, other co-linking techniques require regression variables to be included in the same lag link in the ARDL approach, the regression variables can tolerate different optimal latencies; Fourthly, if the data is not guaranteed for the attribute of unit test or stop, link level I (1) or I (0), then applying the ARDL procedure is most appropriate for empirical research Therefore, to quantify the impact of FDI on the socio-economic development targets of Hai Duong province from 1997 to 2016, the author used the ARDL model Based on the actual data collected on the socio-economic targets of Hai Duong from 1997 to 2016, in order to test the impact of FDI on socio-economic targets of the province, the technical tools for supporting the analysis were Eview sofware, test impact of FDI on measurement criteria: (1) Gross Regional Domestic Product (GRDP), (2) Provincial Investment Capital, (3) Trade Openness, (4) Employment (5) Impact of using social capital, (6) Investment capital for labor, (7) Urban population, (8) Density of industrial and construction sector, (9) Density of of trade and service sector New points and contributions of the thesis - New contributions in academics, theory The thesis explains the theoretical basis for the impact mechanism of FDI on local socio-economic development, in which the impact of FDI can be either direct or indirect On that basis, explaining the impact of FDI on the assessment targets of socio-economic development in the selected area are such as: Economic growth, efficiency of social investment capital, economic structure, trade openness, production technology, employment, urban , human and environmental development, at the same time, analyzing of some of the social issues that arise in the presence of FDI such as labor negativities, ethical standards, social inequality and the limitations of FDI is transfer pricing - New conclusions about practical assessment Firstly, the thesis has detailed description of the actual status of the relationship between FDI and some measurement targets of socio-economic development in the province of Hai Duong from 1997 to 2016 by statistical tables, mathematical graphs, collected data By that, Initially, there were preliminary comments on the impact of FDI on the socio-economic development of Hai Duong province from 1997 to 2016 At the same time, the thesis has synthesized and given system of policies on foreign direct investment of Vietnam and of Hai Duong province in the period of 1997 - 2016 according to the historical process Particularly, it clarifies some basic contents of investment policies, including Hai Duong's foreign direct investment, whereby, this shows the application of Vietnam's foreign direct investment policies to the specific conditions of Hai Duong province Secondly, the thesis applies the Autoregressive Distributed Lag model (ARDL) to verify the impact of FDI on the socio-economic development of Hai Duong province in the period of 1997 - 2016 The test results show that FDI has had a directly or indirectly positive impact on trade openness, export and import expansion, impulsing urbanization both in the short and long term, improving production techniques in the short term However, FDI has had a negative spillover impact on the efficiency of using investment capital in the long term, industrial and construction development, both in the short and long term, manifested in the presence of FDI, infringed investment and development of domestic enterprises, which may narrow production scale and business field, bankrupt, and take over domestic enterprises, whereby, it will affect and reduce employment for labors Based on the results of practical research, the thesis suggests that in order to increase the positive impact and limit the negative impact of FDI on Hai Duong's socio-economic development in the coming time, firstly, for FDI projects operating need to strengthen the state management and encourage the expansion of connection with domestic enterprises, secondly, for the attraction of FDI, it should be selected by area, field, industry, technical level, investment partners associated with quality and efficiency, strengthen connection between FDI enterprises and domestic enterprises, promote the development of supporting industries - New proposals on solutions The thesis proposes three groups of solutions to enhance the positive impact and limit the negative impact of FDI on socio-economic development of Hai Duong province by 2025 with a vision to 2030 These are the group of solutions for the business investment environment including specific solutions, the solution group for the state management on foreign investment including specific solutions and the solution group for expanding the connection between domestic enterprises and FDI enterprises including specific solutions At the same time, the thesis analyzes some basic conditions that belong to the National Assembly, the Government and other ministries to implement the proposed solutions Structure of the thesis Beyond the introduction, conclusion, reference list and appendices The thesis consists of chapters: Chapter 1: Research Overview Chapter 2: Theory on impact of FDI on local socio-economic development Chapter 3: Actual status of impacts of FDI on socio-economic development in Hai Duong province Chapter 4: Solutions to enhance positive impact and limit the negative impact of FDI on socio-economic development in Hai Duong province Chapter 1: RESEARCH OVERVIEW In this chapter, the author gives a system of research works related to the theme "Impacts of FDI on socio-economic development" at home and abroad in the forms of scientific topics, scientific reports, theses and dissertations, scientific papers, clarifying the contents of the research works have been resolved to inherit, indicating the gap of the published works which are: When there is the presence of FDI in a country/region (local), how is the impact (positive, negative) on socio-economic development targets? (including qualitative and quantitative), there is no research work that studies fully and comprehensively about the theoretical and practical basis This is the theoretical and practical gap that the published research has not mentioned that the Researcher is approaching, so should continue to study and complete Particularly, it has been studied specifically in Hai Duong province in order to contribute to the socio-economic development of Hai Duong province in international economic integration Thus, the author chooses the topic: "Impact of Foreign Direct Investment on Socio-Economic Development - Research the Case in Hai Duong Province" combines qualitative and quantitative analysis and testing the ARDL model to assess the impact of FDI on socio-economic development in Hai Duong Province The issues that need further research of the thesis topic are: Firstly, the mechanism and impact of FDI on local socio-economic development (the thesis limits the content of analysis according to targets: economic growth, human development index (HDI), economic structure, urbanization, production technology, efficiency of using social investment capital, trade openness, employment and environment) Secondly, combine qualitative analysis with the application of the ARDL model to verify the impact of FDI on the socio-economic development targets of Hai Duong In order to draw a realistic assessment of the impact of FDI on socioeconomic development of Hai Duong from 1997 to 2016 Thirdly, propose measures to enhance the positive impact, limit the negative impact of FDI on socio-economic development of the province until 2025 and vision to 2030 Chapter 2: THEORY ON THE IMPACT OF FOREIGN DIRECT INVESTMENT ON LOCAL SOCIO-ECONOMIC DEVELOPMENT 2.1 General theory of local socio-economic development 2.1.1 Social economic development The author give a system of a number of theoretical issues on: concept of development, economic development, social development, views on socio-economic development and socio-economic development models 2.1.2 Local socio-economic development Give a system of a number of perspectives on economic development, local socio-economic development technical analysis, local socio-economic development, measurement targets of local socio-economic development, research scope of the thesis, analysis of targets, Economic growth, efficiency of social investment capital, economic structure, trade openness, production technology, labors, urbanization, human development and environment, analyze the factors influencing local socioeconomic development 2.2 Principles of the impact of foreign direct investment on local socioeconomic development 2.2.1 Foreign direct investment The author analyzes the concepts: investment, FDI, characteristics and forms of FDI 2.2.2 Impact of FDI on local socio-economic development 2.2.2.1 Impact mechanism of FDI on local socio-economic development - Direct impact mechanism of FDI through investment channel The theoretical framework used is the Harrod - Domar growth model and the theoretical model proposed by Nguyen Thi Tue Anh et al (2006) (refer also the model of Borensztein, E., De Gregorio, J., and Lee, JW (1998), "How Does Foreign Direct Investment Affect Economic Growth?", Journal of International Economics, 45, pp 115-135), to analyze the relationship between Economic growth and their capital needs - Indirect impact mechanism of FDI At the same time with direct impact on Economic growth, the FDI enterprises have indirect impact, also known as spillover impact on activities of domestic economy such as increasing competitive pressure, requiring domestic economic operators to improve production and business efficiency, speeding up the technology transfer process, etc… It can be divided into types of spillover impacts: (1) production connection, (2) technology transfer, (3) competition, (4) attracting and training labors (5) impact on exports, the above impacts may be positive or negative, while the desired goal is the rapid and sustainable growth of the country/locality 2.2.2.2 Impact content of FDI on local socio-economic development a) Impact on economic growth Positive impact FDI exerts pressures to force investment recipient countries, or localities to increase the competing capability, such as improving the investment environment and improving infrastructure, thereby promoting economic growth and development At the same time, FDI stimulates investment, enhances business efficiency of domestic enterprises, first of all, there are enterprises supplying materials for FDI enterprises or using products from FDI enterprises In addition, FDI will help domestic enterprises to gain access to world markets through form of joint ventures and production and supply networks in the region and globally Negative impact (1) When the presence of FDI enterprises can create strong competition with domestic enterprises Domestic firms lose market, lack of skilled labor and it can lead to bankruptcy In addition, FDI can narrow domestic investment, (2) FDI enterprises often exploit thoroughly and find ways to use the mineral resources, land in the investment recipient countries, causing depletion of natural sources and environmental pollution b) Impact on scale and efficiency of using investment capital For countries with backward economy and low level of production, the investment capital of the development investment becomes more and more urgent, due to poor and backward condtitions, domestic capital mobilization is difficult and limited To resolve this conflict, developing countries only have the best way of implementing open-door policy, calling investment capital from abroad, through FDI FDI often accompanies modern technology Thanks to that, the labor productivity in the recipient country and efficiency of using resources increase c) Impact on economic restructuring Positive impact FDI effectively implements and directs the formation and promotion of economic structure for the investment recipient country in a positive way, facilitate the exploitation of the potential of labor, resources and economic position Negative impact FDI can unbalance the industry and the economic zone, because target of FDI is profit, so they focus on the industries, fields having the high profit d) Impact on trade openness Positive impact FDI has main types: (1) FDI seeking markets, (2) FDI seeking resources, and (3) FDI seeking efficiency; All three types impact and increase the trade openness of the economy of the investment recipient country Negative impact FDI often focuses on exploiting abundant and cheap labor While the recipient countries lack capital and backward technology, they have not paid much attention to the development of supporting industries to join production network and supply chains of regional and global investors Under this condition, the recipient countries and FDI enterprises must import materials, equipments, spare parts, components from abroad, making the trade balance deficit e) Impact on production technology development Positive impact FDI enterprises will push up and pressure on industrial renewal to increase competing capability for domestic enterprises, through connection between domestic enterprises and FDI enterprises or through dissemination and technology transfer from FDI enterprises Negative impact FDI can transfer to developing countries inappropriate and outdated technology which pollute the environment, not the technology of source and technology in advanced and modern countries g) Impact on employment and income Positive impact FDI enterprises create jobs, increase incomes for indigenous people Negative impact FDI enterprises making loss of many jobs in the traditional sector; FDI enterprises focus on exploiting and using low-cost labor, less trained, seasonal element, with less emphasis on training and using skilled labor and longterm working for FDI enterprises f) Impact on the urbanization process FDI contributes to increase the modernization of economic structure and urban space, contributing to the modernization of urban society However, FDI also has a negative impact on the urbanization process, if FDI projects are massively attracted, without direction, without selection , it may unbalance the economic structure of urban area and deviate from the direction of planning, affecting urban architecture, increasing pollution levels in urban areas receiving investment h) Impact on human development FDI has an impact on increasing incomes and increasing life expectancy, knowledge of the people of the investment recipient country i) Impact on the environment Positive impact FDI from developed countries, tend to export to developed countries with high requirements on food safety, they have to use the modern technology, to ensure the safety of environmental sanitation Therefore, FDI has contributed to improving the environment of the investment recipient country Negative impact FDI also causes the destruction of ecological environment, industrial waste water of FDI enterprises polluting the environment of the investment recipient country k) Arising some social problems There are the negative issues about the labor market, moral standards and social inequality for the investment recipient country h) Status of price transfer within internal sphere of transnational companies Chapter 3: STATUS ON THE IMPACT OF FOREIGN DIRECT INVESTMENT ON SOCIO-ECONOMIC DEVELOPMENT IN HAI DUONG PROVINCE 3.1 Socio-economic characteristics and foreign direct investment of Hai Duong province 3.1.1 Socio-economic characteristics of Hai Duong province The author presents the natural, socio-economic characteristics of Hai Duong province 3.1.2 Foreign investment in Hai Duong province in the period of 1997 - 2016 3.1.2.1 Policy system on foreign direct investment The author presents the system of legal policies on foreign direct investment of Vietnam and the application of Hai Duong province in the period of 1997 - 2016 3.1.2.2 Status of foreign direct investment in Hai Duong province - Scale of FDI capital As of 2016, there are 405 FDI projects in existence, the total registered investment capital is 7,404 billion USD, accounting for 2.63% of the whole country Total implemented capital is 3,732 USD billion, reaching 49.8% (the whole country is 46.01% , the Red River Delta area is 48.88%) Average investment capital scale of one project is 18.5 million USD (the whole country is 14.3 million USD, the Red River Delta area is 12.53 million USD) - FDI by field FDI in the field of industry and construction, there are 301 projects accounted for 88%, total registered investment capital of $ 6,809.9 million USD accounting for 94.9% Trading and service field has 25 projects, accounting for 7.3%, total registered investment capital of 227.8 million USD accounting for 3.1% The Agro-Forestry-Fisheries field has 16 projects accounting for 4.7%, total registered investment capital of 146.7 million USD accounting for 2% - FDI by location Hai Duong City, Cam Giang district, Nam Sach district, Kim Thanh district and Chi Linh town have many FDI projects, of which, Hai Duong City is the place where many projects and registered investment capital is nearly billion USD accounting for 32.97% - FDI by partner Taiwan, Japan, South Korea, China and Hong Kong have many projects However, the investment capital of China has a low proportion of only 1.96%, lower than the proportion of Canada where has only 05 projects but the proportion of registered capital is 3.5% and the US where also has only 05 projects but the proportion of investment capital is 1.76%, it can be said that the scale of investment projects of the countries is quite large difference - FDI by investment form Currently, there are two forms of FDI that are the joint venture and 100% of foreign investment capital, investing 100% foreign capital accounting for 82.7% of registered capital and 72.73% of implemented capital 3.2 Impact of foreign direct investment on socio-economic development of Hai Duong province 3.2.1 Positive impacts 3.2.1.1 Impact on economic growth a) Growth of social investment capital In 1997, FDI capital accounted for 60.53% of the total investment capital of the whole society of Hai Duong is the greatest in the period 1997 - 2016 with the total registered investment capital of nearly 460 million USD However, this proportion declined rapidly, especially in years: 1999, 2000 and 2001, the FDI capital was almost negligible, it was mainly domestic investment capital In the following years, the proportion of FDI capital has increased by digits, but the increase and decrease were unstable over the years, from 1997 to 2005, FDI capital and investment capital in the province increased in opposite direction, but from 2006 to 2012, they increased the same direction, from 2013 to 2016, they increased in opposite direction Therefore, it is not possible to identify the relationship between FDI capital and investment capital in the province b) Contribution of FDI to GRDP The FDI sector has contributed to the province's economic growth quite large and increased in relatively stable level over the years In 1997, FDI only contributes to GRDP by 2.19%, but by 2016, it accounts for 35.22% GRDP of Hai Duong, increasing 16 times, the growth rate of FDI sector in period of 1997-2007 is much higher than the growth rate of GRDP at current prices, but in period of 2008-2012, it is lower than the growth rate of GRDP, so it is not possible to evaluate trend and impact of FDI on GRDP of the province c) Contribution of FDI to the budget FDI enterprises paying into the budget have a tendency to increase over the years, especially in years: 2004, 2005, 2006 and 2016, contributing over 50% of budget revenue of the province 3.2.1.2 Impact on the efficiency of using capital investment In each phase, investment activities will affect the efficiency of the investment capital in different levels To analyze the efficiency of the investment capital, it is necessary to use targets to measure each investment activity Within the scope of the research, the author uses the target of ICOR coefficient to evaluate the FDI on the efficiency of using investment capital in the whole society The results show that the general trend is that when the FDI capital of the following year increases compared to its of the previous year, the ICOR coefficient of the whole province increases, which means that the efficiency of using investment capital in the whole society decreases, conversely, when the FDI capital of the following year decreases as compared to its of the previous year, the ICOR coefficient of the whole province decreases, which means that the efficiency of using investment capital in the whole society increases, thus, FDI may have had negative impacts on the efficiency of using investment capital of the province 3.2.1.3 Impact on economic restructuring FDI capital implemented into the province in the period 1997-2016 in the field of industry and construction accounted for 98.91%, the service field accounted for 1.09%, contributed significantly to production value in the field of industry and construction in the period of 1997 - 2016, but it has not assessed yet whether there is a positive impact on the growth in the field of industry and construction, although the growth rate of the field of industry and construction in the period of 1997 - 2016 exceeded other fields, averagely increasing 18.78%, followed by the service field, averagely increasing 16.96%, the Agro-Forestry-Fisheries field increased averagely 10.37%, helped the economic structure of the province move towards industrialization, modernization, improve industrial production capacity 3.2.1.4 Impact on import and export value The export proportion of FDI in the total export turnover in the period 1997 2016 occupied a large proportion, especially from 2006 to 2016, accounting for 74.53% to 95.71%, contributing to boost the total export turnover in the period of 1997 – 2016, averagely increasing 30.07% per year Import proportion of FDI in the total import turnover in the period 1997 - 2016 accounted for over 60%, average growth rate of import turnover is 29.6%, the rate of FDI is 31.9% 3.2.1.5 Technology production transfer The impact of FDI on the advanced technology transfer to the economic activities of the investment recipient country is considered in two respects: directly transferring the advanced production technology to the investment recipient country, the second is the dissemination of production technology from FDI enterprises to domestic enterprises through the connection between FDI enterprises and domestic enterprises, to assess the level of production technology of FDI enterprises, the author considers based on two targets of labor productivity and capital equipment for laborer a) Labor productivity The labor productivity of the FDI sector of Hai Duong in period of 1997 - 2016 is much higher than that of domestic enterprises in the province That reflects FDI enterprises of Hai Duong have the level of technology, technique, skills of laborers, labor productivity is superior to the domestic enterprises in the province On the other hand, from 1997 to 2002, it was 14 times to 20 times higher than, but from 2003 to 2016, the rate of decline was less than 10 times to over times Thus, there is a positive spillover impact on the level of technology and skills of laborers from the FDI sector to domestic enterprises, helping domestic enterprises improve their level of technology and skills to increase labor productivity, narrow the productivity gap with FDI enterprises b) Investment capital for laborer The results showed that the FDI capital and investment capital for laborer in the province tend to be the same direction, that is when the FDI capital increased, the investment capital for one labor also increased This shows that the FDI capital of the province in the period 1997 - 2016 has positive spillover impacts of advanced technology from the FDI sector to the domestic enterprises of the province, the enterprises have increased investment in machinery and equipment, modernization of production technology According to the directions, for independent enterprises, it is necessary to raise the level of production technology in order to improve the competing capability with FDI enterprises to survive and develop For enterprises participating in the production supply chain of FDI enterprises, these enterprises have to invest and innovate production technology that is compatible with FDI enterprises is required 3.2.1.6 Contribute to creating jobs for laborers a) Contribute to creating jobs for laborers FDI enterprises in the province attracted laborers to work, that increased both from 1997 to 2016 In the period 1997 - 2003, the proportion of laborers in the FDI sector was less than 1% of the total working laborers of the province, in the period of 2004 – 2010, it was 8.47%; in the period 2011 - 2016, it was over 10%; by 2016, laborers in the FDI sector accounted for 13.88% of the total working laborers of the province The overall employment rate in Hai Duong province was 18.1% in period of 1997 to 2016, while the FDI sector increased averagely by 67.82% For the indirect impacts of FDI enterprises on solving the employment problem for the labor force in the area, According to the WB, direct laborer will create jobs for to laborers, serving in the service sector and industry and construction sectors In this ratio, the total number of laborers (including direct and indirect ones) created by FDI enterprises, calculated for 2016 10 were 462,000 people, accounting for 42.8% of the total working laborers of the province to 616,000 people accounting for 55.52% b) Labor restructuring With the participation of FDI enterprises, the labor force moved from the Agro-Forestry-Fisheries field to the sectors of industry and construction fields more and more, making the proportion of laborer in the industry and construction fields increase faster, for the service field, the number of laborers increased absolutely, however, the proportion decreased because there is a significant gap in the proportion of the industry and construction fields before and after FDI participation, for example in 2016, the difference in the industry and construction fields is 10.15% (increasing from 25.22% to 35.37%), that of the Agro-Forestry-Fisheries field is 5.73% (decreasing from 41.77% to 36.04%) Thus, the labor force is attracted to the industry and construction fields when having the operation of FDI enterprises grows much faster than that of the service field 3.2.1.7 Process of urbanization The results show that when the FDI capital in the following year increase compared to the previous year, it has the impact on urban population growth rate Although the rate of growth has been uneven and there have been a number of years of decreasing FDI capital, the urban population has increased, possibly due to the lag of FDI capital 3.2.1.8 Human Development The HDI of Hai Duong province in the period of 2000 - 2016 has continuously increased over the years, showing the level of socio-economic development of the province has continuously increased over years Compared to the whole country, from 2000 to 2008 it was only equal to and lower than the average of the whole country, but from 2009 to 2016, it exceeded the average of the whole country, especially in 2016, Hai Duong reached 0.7732, when the average of the whole country is 0.676, that was more 0.1066 points, moreover, it has tended to increase 3.2.2 Negative impacts 3.2.2.1 The structure of socio-economic development is out of balance The purpose of FDI is profit, so industries and fields with high profit, low risk shall be interested by FDI enterprises, and industries and fields that are very necessary for socio-economic development of the province, but not having profit or low profit shall not be interested by FDI enterprises, especially for the industries of agriculture, forestry and fisheries with low profit and high risk, there are very few FDI investment projects In terms of location, FDI enterprises are mainly located along National Highway 5A, which is convenient for traffic and infrastructure While localities need to accelerate the economic development, despite high incentives but not being invested This leads to the paradox that areas with high development level attract more FDI, especially in urban areas, around Hai Duong city, underdeveloped areas have few FDI enterprises with low economic growth such as Thanh Ha, Thanh Mien districts 3.2.2.2 Gap between the rich and the poor To assess the negative impact of FDI in Hai Duong province on the gap between the rich and the poor, the author considers and analyze on two aspects, the first is the difference gap on income between FDI enterprises and domestic enterprises, the second is the difference gap on income between urban and rural people between 1997 and 2016 a) Income of FDI enterprises and domestic enterprises The average wage of FDI enterprises in the period of 1997-2000 was 18.47 times higher than that of domestic enterprises However, the difference gap tends to decrease, in the period from 2005 to 2010, it was 3.52 times, in the period of 2011-2016, it was 2.43 times, but the absolute difference was greater, specially, in the period of 2005 - 2010, the average income of labor of FDI enterprise was 6,494 million VND higher than that of the domestic enterprise but in the period of 2011 – 2016, it was 8,602 million VND, which is 1.33 times higher, this showed a clear gap between the rich and the poor between domestic and FDI enterprises b) Income between urban and rural areas The coefficient of income gap between urban and rural areas for the period of 2000-2005 is 10.6%, that in the period of 2011-2016 is 1.51 times and 1.35 times in the period of 2011-2016 However, the absolute difference between the two regions increased 3.2.2.3 Spillover impact of FDI is limited Although FDI has a connection with domestic enterprises in production and business, FDI enterprises mainly develop themselves, have not developed the supporting industries, FDI enterprises only invest in some industries such as textile and garment, automobile assembly mechanics , electronic technology , although the value of production value is high, but the value added is low, FDI contributes a large part to the province's export turnover but also imports a lot, from 1997 to 2008, the proportion of import/export was more than 100%, from 2009 to 2016, it was more than 70%, reflecting the weakness of the the supporting industries and promoting low production of domestic enterprises of FDI 3.2.2.4 Causing environmental pollution In addition to many FDI enterprises that perform well in the treatment of waste and wastewater, some FDI enterprises have not yet fully complied with regulations on environmental protection 3.2.3 Some inadequacies of FDI The scale of capital of investment projects is not stable and uneven;The structure of FDI is not balanced (in investment fields, investment areas, investment forms), the efficiency of using FDI is low; there are price transfer and social problems 3.3 Impact assessment of FDI on socio-economic development of Hai Duong province for the period of 1997-2016 3.3.1 Selecting theoretical model To quantify the impact of FDI on the socio-economic development targets of Hai Duong province from 1997 to 2016, the author used the ARDL model The ARDL model is represented as follows: yt = m +α1*yt-1+α2*yt-2 +…+αp*yt-p + β0*xt+β1*xt-1+…+ βq*xt-q + εt In which: - yt and xt is the stop variables, and εt is white crepe - yt-p and xt-q are the stop variables at lag ARDL (p,q) model of yt is explained by two components: (i) the self-regression component consisting p is its own delay variables yt-1, yt-2, yt-p and delayed distribution component of other explanatory variables (x) with q lag In order to ensure reliability 11 12 when using the ARDL model, the time series variables are stop, lag is optimal deflection, there is no autocorrelation, no change variance and appropriate function form 3.3.2 Procedures, methods of estimating time series using the ARDL model 3.3.2.1 Testing the stop of the time series The time series yt stops when satisfing the following three conditions: (1) Average: E(yt) = µ, ∀t, (2) Variance: Var(yt) = E(yt - µ)2 = σ2, ∀t, (3) Covariance: Cov(yt) = E [(yt - µ) (yt+k - µ)] = ρ, ∀t There are a variety of stop testing methods of time series including Dickey-Fuller (DF) test, Phillip-Person (PP) test, extended Dickey and Fuller (ADF) tests Research of the topic using the ADF test to perform unit test, test model in the form of: ∆yt = α0 + βyt-1 + ∑௞௜ୀଵ ߶∆yt-1 + εt (1) ∆yt = α0 + δt + βyt-1 + ∑௞௜ୀଵ ߶∆yt-1 + εt (2) In which: ∆yt= yt - yt-1, yt is the time series of data under review, k is lag length, εt is white crepe Difference of model (2) and the model (1) is trend variables on time White crepe is term showing random error derived from classical assumptions that it has an average value of 0, the variance is constant and not self-correlated The research conducts the test of a case with tendency on time by using model (2) The results of ADF testing are often very sensitive to the choice of lag length k so the AIC information standard is used to select the optimal k for the ADF model Specifically, k values are chosen so that the smallest AIC This value is automatically retrieved by using the Eviews software to perform unit tests The test hypothesis is: H0: β = (yt is the non-stop data series) H1: β < (yt is the stop data series) To test the hypothesis H0, the research compares the test value τ calculated with the critical value τ of Mackinnon and concludes on the stop of the observation series Specifically, if the absolute value of the calculated value is greater than the absolute value of the critical value, then the H0 hypothesis will be rejected, it means that this is a stop data series, and on the contrary, if the H0 hypothesis is accepted, it means that this is a non-stop data series 3.3.2.2 Determining the optimal lag of the time series Within the scope of this thesis, the author uses the support tool which is Eviews software, with the AIC selection criterion, an estimate not limited to the ARDL model, to determine the optimal lag 3.3.2.3 Testing the long-term co-linking relationship between variables Testing the long-term co-linking relationship between variables of the ARDL model by using Bound test 3.3.2.4 Estimating the long and short term coefficients of the ARDL model When the co-integration in the long-term between variables has been identified by Bound test, the long-term and short-term regression coefficients will be estimated with the lag of the ARDL model 3.3.2.5 Diagnostic tests Including: heteroscedasticity, autocorrelation test, model test and balance test, including the cumulative sum test (CUSUM) and the cumulative sum squared test (CUSUMSQ) 13 3.3.3 Experimental model In order to test the actual state of the impact of FDI on Hai Duong's socioeconomic development, according to the ARDL model, within the scope of the thesis, the author selects 10 variables (1 independent variable, independent variables) corresponding to the criteria reflecting the level of socio-economic development The variables in the empirical model were transformed into natural logarithms for estimation, and the analysis data were collected from the secondary data for the period 1997 - 2016, including 20 observations provided from the departments of Hai Duong province The variables in the model are described as follows: NO Name of variables Symbol Unit FDI Billion VND GRDP Billion VND Foreign direct investment Gross Regional Domestic Product Domestic investment capital in the province VDTTN Billion VND Efficiency of using investment capital of the whole society ICOR Coefficient CNXD Coefficient 10 Proportion of industry and construction Proportion of Trade & Service Trade openness Amount of investment capital for 1laborer Number of laborer Annual Urban Population TMDV OPEN Coefficient Coefficient KT Billion VND LD People DSDT People Interpretation of data calculation way Implemented capital of each year shall be converted into prices comparing with 2010 Gross Product of each year shall be converted into prices comparing with 2010 Implemented capital of each year shall be converted into prices comparing with 2010 ICOR = Total investment capital of research year/(GDP of research year GDP of the previous year of research year) By GRDP of the CNXD/GRDP of each year Calculated by GRDP of Trade & Service divided to GRDP of each year Import and export value/GRDP of each year By total asset capital converted into prices comparing with 2010 divided by the total number of laborers working Number of laborers working of each year By total urban population of each year So, the experimental model is: Yt= m + α1*Yt-1+ α2*Yt-2 +…+αn*Yt-n +∑௡௜ୀ଴ ߚ௜ ‫ܫܦܨܰܮ‬௧ି௜ + εt (n = 1, 19) In which: Y= (LNGRDP, LNVDTTN, LNICOR, LNCNXD, LNTMDV, LNOPEN, LNKT, LNLD, LNDSDT) 3.3.4 Estimated results 3.3.4.1 Testing the stop of the time series The LNGRDP, LNVDTTN variables stopped at the 1% significance level, the LNFDI, LNLDs variables stopped at a 10% significance level, the LNICOR, LNNXD variables stopped at the 5% significance level, the LNDSDT, LNKT, LNTDDV, LNOPEN variables stopped at in the first differential degree with a significance level of 1% To estimate by the ARDL model, the input variables are LNGRDP, LNCNXD, LNICOR, DLNOPEN, DLNDSDT, DLNTMDV, DLNKT, 14 LNLD, LNVDTTN and LNFDI The scope of the thesis is the impact of FDI on socio-economic development Hence, the experimental models to test impact of FDI on socio-economic development of Hai Duong are: (1) LNGRDP = m + α1*LNGRDPt-1+ α2*LNGRDPt-2 +…+ αn*LNGRDPt-n + ∑௡௜ୀ଴ ߚ௜ ‫ܫܦܨܰܮ‬௧ି௜ + εt (2) LNVDTTN = m + α1*LNVDTTNt-1+ α2*LNVDTTNt-2 +…+ αn* LNVDTTNt-n + ∑௡௜ୀ଴ ߚ௜ ‫ܫܦܨܰܮ‬௧ି௜ + εt (3) LNICOR = m + α1*LNICORt-1+ α2*LNICORt-2 +…+ αn* LNICORt-n + ∑௡௜ୀ଴ ߚ௜ ‫ܫܦܨܰܮ‬௧ି௜ + εt (4) LNCNXD = m + α1*LNCNXDt-1+ α2*LNCNXDt-2 +…+ αn*LNCNXDtn + ∑௡௜ୀ଴ ߚ௜ ‫ܫܦܨܰܮ‬௧ି௜ + εt (5) DLNTMDV = m + α1*DLNTMDVt-1+ α2*DLNTMDVt-2 +…+ αn* DLNTMDVt-n + ∑௡௜ୀ଴ ߚ௜ ‫ܫܦܨܰܮ‬௧ି௜ + εt (6) DLNOPEN = m + α1*DLNOPENt-1 + α2*DLNOPENt-2 +…+ αn*DLNOPENt-n +∑௡௜ୀ଴ ߚ௜ ‫ܫܦܨܰܮ‬௧ି௜ + εt (7) DLNKT = m + α1*DLNKTt-1+ α2*DLNKTt-2 +…+ αn*DLNKTt-n + ∑௡௜ୀ଴ ߚ௜ ‫ܫܦܨܰܮ‬௧ି௜ + εt (8) LNLD = m + α1*LNLDt-1+ α2*LNLDt-2+ + αn*LNLDt-n + ∑௡௜ୀ଴ ߚ௜ ‫ܫܦܨܰܮ‬௧ି௜ + εt (9) DLNDSDT = m + α1*DLNDSDTt-1+ α2* DLNDSDTt-2 +…+ αn*DLNDSDT t-n + ∑௡௜ୀ଴ ߚ௜ ‫ܫܦܨܰܮ‬௧ି௜ + εt 3.3.4.2 Determining optimal lag The optimal lag selection for ARDL models is based on the AIC standard value obtained from an unrestricted estimation of the ARDL model The results are: LNGRDP (2,0), LNVDTTN (5,3), LNICOR (3,4), LNCNXD (3,5), DLNTMDV (2,0), DLNOPEN (4,4), DLNKT (1,4), LNLD (6,1), DLNDSDT (5,4) 3.3.4.3 Testing the long-term co-linking relationship between variables in ARDL model Bound test results from Eviews software show that variables in the ARDL model have a co-linking relationship, or a long-term relationship 3.3.4.4 Estimating the long and short term coefficients of the ARDL model Estimated results of regression coefficients of two short-term and long-term models are summarized as follows: Variables Coefficient Standard deviation Statistics t LNGRDP model (2,0) D(LNFDI) 0.007575 0.015254 0.496553 LNFDI 0.011007 0.023726 0.463915 Cointeq = LNGRDP - (0.0110*LNFDI + 9.3086 + 0.0898*@TREND ) LNVDTTN model (5,3) D(LNFDI) 0.005579 0.124803 0.044704 LNFDI -0.016292 0.083126 -0.195990 Cointeq = LNVDTTN - (-0.0163*LNFDI + 7.2966 + 0.1402*@TREND ) LNICOR model (3,4) D(LNFDI) 0.130446 0.107146 1.217470 LNFDI 0.450188 0.075005 6.002116 Cointeq = LNICOR - (0.4502*LNFDI -1.4373 -0.0461*@TREND ) LNCNXD model (3,5) 15 Probability 0.6278 0.6504 0.9665 0.8542 0.3105 0.0093 D(LNFDI) -0.031231 0.010710 -2.916124 LNFDI -0.047888 0.010696 -4.477032 Cointeq = LNCNXD - (-0.0479*LNFDI + 3.8055 + 0.0305*@TREND) DLNTMDV model (2,0) D(LNFDI) 0.018564 0.008291 2.239091 LNFDI 0.008568 0.003584 2.390472 Cointeq = DLNTMDV - (0.0086*LNFDI -0.0326 -0.0024*@TREND ) DLNOPEN model (4,4) D(LNFDI) 0.119792 0.027604 4.339736 LNFDI 0.131873 0.007768 16.976207 Cointeq = DLNOPEN - (0.1319*LNFDI -0.4578 -0.0341*@TREND ) DLNKT model (1,4) D(LNFDI) 0.342389 0.146501 2.337117 LNFDI 0.132376 0.197979 0.668637 Cointeq = DLNKT - (0.1324*LNFDI -0.9467 -0.0058*@TREND ) LNLD model (6,1) D(LNFDI) -0.010947 0.006561 -1.668337 LNFDI -0.004208 0.000981 -4.290232 Cointeq = LNLD - (-0.0042*LNFDI + 6.7481 + 0.0135*@TREND ) DLNDSDT model (5,4) D(LNFDI) 0.052328 0.014784 3.539499 LNFDI 0.038951 0.007410 5.256529 Cointeq = DLNDSDT - (0.0390*LNFDI -0.1738 -0.0069*@TREND) 0.0434 0.0110 0.0449 0.0341 0.0123 0.0001 0.0476 0.5225 0.1706 0.0127 0.0714 0.0343 3.3.4.5 Diagnostic test of ARDL models Diagnostic tests are heteroscedasticity test using the Breusch-Pagan-Godfrey test, self-correlation test using Lagrange (LM) test and model test using Ramsey RESET test, the models not exhibit heteroscedasticity and correct model 3.3.4.6 Test the balance The cumulative sum test (CUSUM) and the cumulative sum squared test (CUSUMSQ), Basic models are within the standard range of 5%, so it is possible to conclude that the balance of the model is stable so that the model is stable 3.3.5 Discuss the estimated results of the ARDL model First, the impact of FDI on GRDP Both in the short and long term, the impact of FDI on total provincial income has not been detected The qualitative analysis also fails to assess the trend and impact relationship of FDI on the GRDP of the province However, the impact of FDI on the GRDP in the province is positive, meaning that when the FDI increases, it will lead to an increase in GRDP Second, the impact of FDI on investment capital in the province In the short and long term, there is no impact of FDI on attracting investment capital in the province The qualitative analysis in Chapter also does not show the relationship between FDI and investment capital in the province Thirdly, the impact of FDI on the efficiency of capital use In the long term, FDI negatively impacted the efficiency of using capital When increasing by 1% of FDI capital, ICOR shall increase 0.45%, which the efficiency of using capital investment of the whole society decreases This is also consistent with qualitative analysis Fourthly, the impact of FDI on the proportion of industry and construction field In both short and long term, FDI has a negative impact on the proportion of the 16 industry and construction field in the province, as when increasing 1unit of FDI, it shall decreases 0.048% of proportion of the industry and construction field in the long term and 0.03% of that in the short term, showing that FDI has negatively affected the development of the domestic industry and construction field Fifthly, the impact of FDI on the proportion of trade and service field In both short and long term, FDI has a positive impact on the proportion of trade and service, when increasing 1unit of FDI, it shall increase 0.0086% of the proportion of trade and service in long term and 0.0186% of that in short term Sixthly, the impact of FDI on trade openness In the short and long term, FDI has a positive impact on trade openness, when increasing unit of FDI, it shall increase 0.131873% of trade openness in the long term and 0.119792% of trade openness in the short term Seventhly, the impact of FDI on technical level In the short term, FDI has a positive impact on the level of technical equipment of the province, when increasing unit of FDI, the technical equipment will increase by 0.342389, in the long term, there has not detected the impact of FDI on the level of technical equipment Eighthly, the impact of FDI on employment In the long term, FDI has negative impact on employment, when increasing 1unit of FDI, it reduces 0.004208 laborers, in the long term, there has not detected the impact of FDI on employment Ninthly, the impact of FDI on the urban population proportion In the short and long term, FDI has a positive impact on the urban population rate of the province, when increasing 1unit of FDI, urban population shall increase 0.052328% in the short term, 0.038951% in the long term increased 3.4 Assessment on the impact of foreign direct investment on the socio-economic development of Hai Duong Province in the period of 1997 - 2016 Based on the qualitative analysis of the impact of FDI on the socio-economic development of HD in the period of 1997-2016 presented in chapter and the results of the verification using the ARDL model in section 4.1 The author draws some assessments on the impact of FDI on the socio-economic development of HD in the period of 1997-2016 as follows: 3.4.1 Positive impacts Firstly, supplement and improve the efficiency of using investment capital of the whole society to promote socio-economic development of the province FDI has contributed to the increase in the total investment capital of the whole society of the province, accounting for over 18% to over 30% of total investment capital of the whole society of the province.However, quantitative analysis has not detected the impact of FDI on domestic sources of investment capital in the province.FDI has positively impacted on the improvement in the efficiency of social investment use, quantitative analysis shows that in the long term, FDI has a positive effect on the efficiency of capital use When increasing one unit of FDI, it increases by 0.45 of efficiency of using investment capital of the whole society Secondly, create value contributing to gross domestic product (GRDP) and expand export turnover of Hai Duong province The average annual contribution of FDI in GRDP of HD is 16.32%, but in both short term and long term, the impact of FDI on the GRDP of the province has not been detected The value of products produced from the FDI sector is mainly export, so the share of FDI’s export in total export turnover of the province in the period of 1997 - 2016 accounts for a large proportion, boosting the export turnover growth rate of 1997- 2016 up to 30.07% per year This result is consistent with the long-term quantitative analysis of FDI that has a positive effect on the degree of trading opennessin the province, when increasing one unit of FDI, it increases 0.132% of degree of trading openess for long term and 0.12% of degree of trading openess in short term Thirdly, FDI contributes to budget revenue of Hai Duong province FDI contribution to the state budget increases steadily over the years, with 44.6% of average contribution to province’s budget collection and 26.94% of the total provincial revenue Fourthly, FDI contributes to the increase in the labor productivity of the provincial economy The labor productivity of FDI enterprises in Hai Duong from 1997 to 2002 was more than 14 times to over 20 times, but from 2003 to 2016 it decreased rapidly from 10 times to 2.56 times in 2016, thus it can be seen that the positive impact of labor productivity from FDI enterprises to domestic ones has boosted the overall labor productivity, and quantitative analysis shows that FDI has had a positive impact on the level of tecnical equipment in the short term, when increasing unit of FDI, the level of technical equipment increases 0.342389 units Fifthly, FDI contributes to acceleration in the process of urbanization and development of industrial complexes of the province The urban population in 2016 was 427,577 people, accounting for 24.1% of the whole province, increasing 2.33 times in 1997 The average annual growth rate of urban population is 4.82% The quantitative analysis shows that FDI has a positive effect on the rate of urban population in the short term, when increasing one FDI unit, the urban population increases 0.0523% and increases 0.039% in the long term Sixthly, FDI contributes to the increase in HDI index of Hai Duong province 3.4.2 Impediments to the socio-economic development Firstly, overwhelming impact of FDI on industry and construction sector According to the results of quantitative analysis in short and long term, FDI reduces the proportion of industry and construction sector, when increasing FDI unit, the proportion of industry and construction sector decreases 0,048% in long term and 0,031% in short term This shows that FDI overwhelms domestic development of industry and construction sector of the province However, the qualitative analysis shows that the growth rate of industrial & construction sector in the period of 1997 2016 increased 18.78% on average, so if there is any conflict? The answer is no Itis explained that the proportion of industry and construction sector in the provinces is not only covered by FDI but also by another business areas, whichcan be the generalized in the following model: GRDPindustry&construction = GRDPFDI + GRDPState sector + GRDPPrivate sector + GRDPOther Assume that GRDP of industry and construction sector in the year of t has the following structure: 100GRDPindustry&construction= 10 GRDPFDI+ 20GRDPState sector + 60GRDPPrivate sector + 10GRDPOther 17 18 Year t+1: - In case, FDI not increase, then GRDP of industry and construction sector has the following structure: 150GRDPindustry&construction= 10GRDPFDI + 30GRDPState sector + 100GRDPPrivate sector + 10GRDPOther - In case, FDI increases twice in the year of t, then GRDP of industry and construction sector has the following structure: 140GRDPindustry&construction= 20GRDPFDI + 25GRDPState sector + 90GRDPPrivate sector + 5GRDPOther In short, when FDI does not increase, GRDP of construction and industrial sectors in year t+1 increases by 50%, and when FDI doubles in year t, GRDP of construction and industrial sectors in year t+1 increases by 40% But when increasing 10GRDPFDI , GRDPindustry&constructionreduces 5, GRDPPrivate sectorreduces 10, GRDPOtherreduces 5, so when decreasing 20 GRDPNon-FDI sector, total GRDP of industry and construction in the year t+1 decreases 10 units, this means that the increase in FDI of industry and construction reduces other sectors of industry and construction, which is reflected in the competition, narrowing production scale, even bankcrupting enterprises of other sectors and causing GRDP of industry and construction to reduce but still increase compared with year t Secondly, FDI reduces employments for the labors in Hai Duong province The results show that, in the long term, FDI has limited the labor force, when FDI increases by 1% FDI, the number of labor reduces 0.004208% Although FDI in Hai Duong province has directly attracted labor to FDI enterprises, and the number of labor tends to increase over the years from 1997 to 2016 and increase rapidly over the period For example, the rate of labor of FDI sector accounted for less than 1% of the total working population of the province in the period of 1997-2003, increased and reached 8.47% in the period of 2004 – 2010, accounted for more than 10% in the priod of 2011-2016 and accounted for 13.73% in 2016, with the total number of direct laborers working in FDI enterprises is about 150,000 people, the average income is 14,624 million dong per person per month The average employment rate in the whole province increased from 18,99% in the period of 1997 - 2016, when the FDI sector increased by 67,82% on average, thus the FDI sector made an important contribution to the direct employment for the labor force in the province in recent years Is this the paradox of quantitative analysis? The answer is no, because: Firstly, solving employment in society, not only the FDI sector, but also other sectors in the economy, is generalized in the following model: Qsocial employment= Q FDI employment+ QState sector employment + QPrivate sector employment + In which, Q is the number of attracted employments in the society It can be seen that when the FDI sector impacts and reduces the total employment of the society but other sectors have a greater impact than the FDI sector and increase it, the total employment of the society still increases Secondly, the qualitative analysis suggests that the FDI sector directly generates an increase of 67.82% in the 1997-2016 period It should be understood that the reduction is in the total employment of a society not in the direct employment of FDI It can be illustrated as follows: Supposing thatthere is a demand for 1000 products in the economy of year t and a demand for 1200 productsin the year t + - In case where only the non-FDI sector meets the demand with the labor productivity norm of 5, then200 labors(1000/5 = 200) will obtain employment in year t, 240 labors (1200/5 = 240) will obtain employment in the year t + - In case where there are more than 20% of FDI in production and labor productivity is 10, the number of labors in each year is calculated as follows: Year t: QSocial employment = 1000*80%/5 + 1000*20%/10 = 800/5 + 200/10 = 180 Year t+1: QSocial employment= 1200*80%/5 + 1200*20%/10 = 960/5 + 240/10 = 216 Thus, with the participation of FDI, the total labor force decreases by 20 labors in the year t anddecreases by 24 laborsin year t + 1, because FDI often has higher labor productivity than other investment sectors in the economy but the number of attracted labors of the whole society and the FDI sector in year t + still increases by 20%compared to year t Thirdly, the effect of widening the income gap of laborers between FDI enterprises and domestic ones Fourthly, the positive spillover effect of FDI is limited Although FDI participates in cooperation with domestic enterprises in production and business activities, many FDI enterprises mainly concentrate on developing their own businesses, not focusing on developing supportinh industry FDI enterprises only operate in some sectors such as textile and garment, automobile assembly, electronics, etc., thus though the production value is very large, the added value is low FDI enterprises mainly contribute to export turnover of the province but import quite a lot as well Fifthly, the impact on environmental pollution, price transfer and social problems In addition to many FDI enterprises that have implemented the regulations on waste treatment and waste water to ensure the environment, there still exist some FDI enterprises that have not fully complied with regulations on environmental protection The phenomenon of price transfer, tax evasion still exists in some enterprises The enterprises always report losses, even losses for many consecutive years, but still invest in production and business expansion, turnover in all year increases In addition to the direct and indirect effects of FDI on the socio-economic development of Hai Duong province in the period 1997 - 2016, there are direct limitations of FDI investing in the province causing negative impacts on the socioeconomic development of the province The result of the analysis in Section 3.2 shows that the direct limitations of FDI in the province during the period 1997 - 2016 are: (1) Unstable and uneven capital size of the investment projects, (2) Unbalanced FDI structure in: investment sector, investment area, form of investment, (3) low efficiency of using FDI capital 3.4.3 Causes of obstructions Firstly, the system of policies and laws on investment is still incomplete, inconsistent and unclear Secondly, the investment and business environment of the province has not been improved in a positive way Thirdly, the infrastructure does not meet the demand for investment Fourthly, the vocational training and support for labors working in FDI enterprises are still limited Fifthly, the strategic orientation of 19 20 attracting FDI is not effective Sixthly, the mobilization and promotion of investment are not effective Chapter4: SOLUTIONS FOR ENHANCING POSITIVE IMPACT AND LIMITING NEGATIVE IMPACT OF FOREIGN DIRECT INVESTMENT ON THE SOCIO-ECONOMIC DEVELOPMENT OF HAI DUONG PROVINCE 4.1 Forcasting the trend of foreign direct investment in Vietnam and Hai Duong Province in the time to come 4.2 Viewpoints and orientations for enhancing positive impacts and limiting negative impacts of FDI on the socio-economic development of Hai Duong province 4.2.1 Socio-economic development strategies for Hai Duong province After 2020, the concentrated urban area of the province will cover all areas of Hai Duong City and parts of Cam Giang and Nam Sach districts where universities, hi-tech parks, clean industrial zones and trade centers will be concentrated Chi Linh Kinh Mon area is the second urban area with Chi Linh city, Kinh Mon town The area of the southern districts of the province is the new rural area with the urban areas being upgraded and expanded and newbuilt urban areas built, converging all the major factors to become a province of industrialization in 2025 and targeting to become an urban center, a city of industry, service, tourism, and science and technology in the Red River Delta by 2030 4.2.2 Viewpoint on enhancing positive impact and limiting negative impacts of FDI on Hai Duong province (1) It is necessary to promote the development of the supporting industry and improve the quality of human resources, (2) To attach the attraction and use with positive impacts and minimize the negative impacts of FDI on quality and efficiency (3) FDI must harmonize, complement the strategy of developing enterprises, strengthen the cooperation between FDI enterprises and domestic enterprises, (4) It is necessary to pay attention to the management of FDI activities after issuing certificate of investment and the efficient use of FDI, (5) To actively encourage FDI projects to expand effectively 4.2.3 Orientation to enhancing positive impact and limiting negative impacts of FDI of Hai Duong province Firstly, the province's strategy on attracting, using and managing FDI must be designed in line with the country's overall strategy and closely linked with the province's socio-economic development strategy for 2011-2020, with a vision to 2030 Secondly, priority should be given to attracting investment in sectors that can generate high added value, significantly contributing to the budget, sectors that can make a breakthrough for development From 2015, Hai Duonghas officially promulgated the list of projects calling for investment and the suspension of investment attraction in the area Accordingly, there are areas of temporary suspension of investment attraction and a list of 41 projects calling for investment in the province 4.3 Measures to enhance positive impacts and limit negative impacts on foreign direct investment on the socio-economic development of Hai Duong province 4.3.1 Groups of solutions on business investment environment 4.3.1.1 Goals of the solutions To overcome the negative impact of FDI on the socio-economic development of the province in the period of 1997 - 2016, namely: (1) The investment and business environment of the province has not been improved actively and clearly, specifically: according to the ranking of provincial competitiveness index in 2016, Hai Duong ranked 36/63 provinces and cities nationwide and ranked 9/11 provinces and cities in the Red River Delta, (2) The infrastructure does not meet the demand for investment attraction and (3) The mobilization and promotion of investment are not effective 4.3.1.2 Specific solutions a)Enhance investment in the development of socio-economic infrastructure; (1) Encourage domestic and foreign economic components, investors who have brand, capital potantial and technology to invest in construction and trading in infrustructure of industrial zones and industrial complexes (2) Complete the renovation and upgrading of provincial roads, water supply and drainage systems, electricity and technical and social infrastructure, and services outside industrial zones an complexes, increasethe stability of electricity, water supply, telecommunications, (3) Pay attention to the planning and construction of resettlement sites; adopt incentive mechanisms and incentives for investment in the construction of apartment buildings, ensuring dwelling houses for workers in industrial parks; Developing social security services in the areas of industrial zones and industrial complexes, (4) Create favorable conditions for business premises for investors b) Promote investment promotion activities to attract FDI c) Reform of administrative procedures, (1) Evaluate “One-Stop Shopping” mechanism implementation, (2) Strengthen computerization in management, (3) Regular review legal normative documents promulgated to promptly amend, supplement, annul or propose the annulment of documents or regulations that are contradictory or overlapping d) Strengthen supporting activities for FDI investors, (1) Improve the efficiency of the credit guarantee fund, (2) Localities should manage and support problems arising from projects which have been issued certificate of investment, (3) Continue to supplement and complete the decentralization mechanism of investment management in line with the assignment of rights attached to the determination of specific responsibilities for local authorities; (4) Renovate process of implementing the project and site clearance, (5) Strengthen coordination among state agencies in removing difficulties and obstacles faced by investors during the project implementation e) Maintain political and social stability 4.3.2 Group of solutions to state management of foreign investment 4.3.2.1 Goals of the solutions In order to overcome the causes of the impact of FDI on the socio-economic development of the province in the period of 1997 - 2016, which are : (1) The policy and legal system related to investment are not complete, inconsistent and unclear, (2) Vocational training and support to workers is limited and (3) Strategic orientation for FDI attraction is not effective (1) environmental pollution, (2) price transfer and social issues, (3) unstable and uneven capital size of investment projects, (4) unbalanced FDI structure 4.3.2.2 Specific solutions 21 22 a) To complete mechanisms and policies to attract FDI (1) There should be specific policies to attract strategic investors, (2) Review and evaluate the implementation of investment incentive mechanisms and policies b) To complete the planning on socio-economic development and development of economic branches, industrial clusters and complexes up to 2025 with a vision to 2030 c) To develop human resources to meet the requirements of attracting and effectively using FDI for sustainable socio-economic development d) To improve the quality of inspection and examination activities of FDI projects e) To periodically organize the assessment of the efficiency of direct investment in the socio-economic development of the province to have appropriate programs and solutions 4.3.3 Group of solutions to expand the links between domestic enterprises and FDI enterprises 4.3.3.1 Goals of the solutions In order to overcome the constraints of (1) The spillover effect of FDI on the industrial and construction sector, (2) Difference in the income of labors between FDI enterprises and domestic enterprises, (3) Positive spillover effects FDI is still limited and (4) low efficiency of FDI 4.3.3.2 Specific solutions a)Develop supporting industries b)Establish mechanisms and policies to support domestic enterprises to cooperate with FDI enterprises in the supply chain to increase the competitiveness of domestic enterprises: Firstly, the institutional environment and policy for linkages, (1) establishing an "inter-agency working group for the development of supporting industries", under the Provincial People’s Committee to strengthen the coordination mechanism and impact on the related parties to unify and reform policies in interdisciplinary areas, (2) building autonomy and strengthening the focal agency capacity in developing supporting industries and linkages Secondly, connecting multinational companies to local enterprises Thirdly, building a supplier development program to upgrade domestic enterprises Fourthly, ensuring the quality of goods Fifthly, the incentive mechanism encourages FDI enterprises to engage in joint ventures and domestic enterprises when selected by transnational corporations to provide equipment 4.4 Conditions for solution implementation In order that the proposed solutions are effective and feasible, the author proposes a number of recommendations to the National Assembly, the goverment and line ministries, which are: (1) Reviewing legal documents on investment, (2) Completing VAT system, (3) Completing the tax policies, (4) The government should stipulate that the localities have to comply with procedure of issuing certificate of investment (5) Regulating the decentralization of investment to the district and commune authorities, (6) Ministries support and facilitate the province to participate in workshops and activities of investment promotion Issuing documents stipulating in the area of environmental management and protection for industrial zones, industrial complexes, mechanisms and policies for investment in industrial complexes infrastructure CONCLUSIONS Foreign direct investment (FDI) plays an important role in Vietnam's socio-economic development in general, in Hai Duong in particular However, the effect of FDI has not reached the desired expectation It should be explained adequately on the basis of how FDI will have a more positive impact on the country's socio-economic development and Hai Duongin the direction of fast and sustainable developmen in socio-economy in the future Starting from that importance, the thesis topic: "The impact of foreign direct investment on socio-economic development: Research the case in Hai Duong province", has studied the following basic contents: Firstly, the thesis clarifies the theory of local socio-economic development, the nature and characteristics of FDI Clarifyingthe direct and indirect (spillover) impact mechanisms of FDI on socio-economic development of the locality and the impact of FDI on local socio-economic development indicators which areeconomic growth, human development (HDI), economic structure, urbanization, production technology, effectivenessof social investment, openness of trading, employment and environment Accordingly, the thesis responds to the research question which is: How is the mechanism and impact of FDI on local socio-economic development assessed? Secondly, analyzing the actual impact of FDI on the socio-economic development indicators of Hai Duong inthe period of 1997-2016 Applying ARDL model to examine the impact of FDI on the socio-economic development of Hai Duong through criteria: GRDP, investment capital in the province, openness degree of trading, labor, ICOR, investment capital for labor, urban population, shares of industry and construction, share of trading and service Based on the results of the ARDL model and qualitative analysis, drawing assessments on the positive and negative impacts and causes of FDI to Hai Duong's socio-economic development From this, the thesis answers the research question which is: How does FDI impact on the socio-economic development indicators of Hai Duong in the period from 1997 to 2016? Thirdly, the thesis has proposed views, orientations and groups of solutions to increase the positive impact and limit the negative impact of FDI on the socioeconomic development of Hai Duong by 2025 with a vision to 2030 They are group of solutions to business investment environment consisting of specific solutions, group of solutions to FDI management consisting of specific solutions and group of solutions to expanding the link between domestic enterprises and FDI enterprises consisting ofspecific solutions At the same time, the thesis analyzes some basic conditions that belong to the National Assembly, the Government and ministries to implement the solutions There are questions to be answered: (1) With the goal of socio-economic development of Hai Duong to 2025, vision to 2030 and impact of FDI on socio-economic development of the province over the past time, should Hai Duong continue to attract FDI? If the answer is yes, what level of attractiveness should the sector focus on? (2) What are the solutions to enhance the positive impact and limit the negative impact of FDI on the socio-economic development of HD in thetime to come? 23 24 LIST OF PUBLISHED WORKS Nguyen Thi Thu Ha (2017), "Foreign investment in Hai Duong - Vietnam with the industrial revolution 4.0", Journal of Science and Technology, No 15, pp 39-48 Nguyen Thi Thu Ha (2017), "Foreign direct investment in Hai Duong province - Issues raised in the context of the industrial revolution 4.0", Proceedings of the National Scientific Workshop "Enhancing the capacity of economic management and business administration in the context of the 4th industrial revolution", Hai Phong University, Hai Phong, pp 248-256 Nguyen Thi Thu Ha (2017), "The Impact of Foreign Direct Investment on the Socio-Economic Development of Hai Duong Province", Journal of Economics and Development, No 240, pp 114-122 Nguyen Thi Thu Ha (2017), "The Impact of Foreign Direct Investment on the Development of Industry and Employment in Hai Duong Province", Asia-Pacific Economic Journal, No 513, pp 93-95 25 ... Duong city, underdeveloped areas have few FDI enterprises with low economic growth such as Thanh Ha, Thanh Mien districts 3.2.2.2 Gap between the rich and the poor To assess the negative impact... clean industrial zones and trade centers will be concentrated Chi Linh Kinh Mon area is the second urban area with Chi Linh city, Kinh Mon town The area of the southern districts of the province is... framework used is the Harrod - Domar growth model and the theoretical model proposed by Nguyen Thi Tue Anh et al (2006) (refer also the model of Borensztein, E., De Gregorio, J., and Lee, JW (1998),