The purpose of this study is to assess the impacts of public investment and private investment on some socio-economic issues in Nam Dinh province during the period 2000 - 2015. The results show that public investment impacts negatively on the economic growth of Nam Dinh province, the efficiency of the capital is still low and its contribution to the GDP of the province is not commensurate with the capital invested, while the private sector has positive impacts on economic growth, contributes much to the GDP of the province. While public investment has not yet played an important role in addressing social issues in Nam Dinh, private investment has become an important driving force in solving social problems. According to the assessment of the impacts of public investment and private investment, the article has implicitly raised issues concerning policies which can improve investment efficiency, especially public investment in Nam Dinh province in the near future.
THE IMPACTS OF PUBLIC INVESTMENT AND PRIVATE INVESTMENT ON SOCIO-ECONOMIC ISSUES IN NAM DINH PROVINCE M.A Nguyen Van Hau Email address: nvhaund@gmail.com Dr Nguyen Thi Hao Email address: haonguyen1841976@gmail.com National Economics University, Hanoi, Vietnam Abstract The purpose of this study is to assess the impacts of public investment and private investment on some socio-economic issues in Nam Dinh province during the period 2000 2015 The results show that public investment impacts negatively on the economic growth of Nam Dinh province, the efficiency of the capital is still low and its contribution to the GDP of the province is not commensurate with the capital invested, while the private sector has positive impacts on economic growth, contributes much to the GDP of the province While public investment has not yet played an important role in addressing social issues in Nam Dinh, private investment has become an important driving force in solving social problems According to the assessment of the impacts of public investment and private investment, the article has implicitly raised issues concerning policies which can improve investment efficiency, especially public investment in Nam Dinh province in the near future Keywords: Public investment, Nam Dinh, impact of public investment Introduction Evaluating the impact of public investment and private investment plays a significant role in identifying issues of public investment policy It is based not only on the number of results achieved, but also on the relationship between the public investment and the current situation of economy, society and environment The paper focuses on evaluating the impact of the public investment and private investment in terms of economy (assessing the contribution to GDP of the province, assessing the impact through the ICOR coefficient, assessing the impact on economic restructuring by the coefficient Cosφ, and the impact on economic growth), as well as society (measured to the decrease in the incidence of poverty and unemployment) at the provicial level According to this assessment, the provincial government can adjust positively and appropriatly the public investment, which will limit a negative impact on the private investment Moreover, the local government can develop a strategic direction for the public investment in order to carry out the public investment restructuring in line with the realities of the economy in the next period Hence, the paper assesses the impact of public investment and private investment on the economy and society of Nam Dinh province 189 Method 2.1 Literature review In the paper, the authors use the concept of public investment in terms of ownership, which is also used in the researches of Mankiw et al (1992); Khan & Kumar (1997); Nguyen Minh Phong (2010) and Vu Tuan Anh (2010) The researchers define that the public investment is all investments derived from the government and stateowned enterprises Many reseachers have attempted to determine the efficiency of public funds by estimating through the Cobb-Douglas production function, where public funds are considered an input variable Aschauter (1989), who is one of the first researcheres in this major, explained the decline in productivity in the United States in 1970 The author pointed out that with every 1% increase in public sector capital, the efficiency of public funds would increase to 0.39% Khan & Reinhart (1990) and Rui & Gallo (1991) developed growth model and concluded that private investment has a positive impact on economic growth which is greater than that of public investment However, these studies used small samples of data from a small number of countries and short study periods; therefore, the results may not be accurate and comprehensive Similarly, Khan & Kumar (1997) have more comprehensive researches which used data in 95 developing countries from 1970 to 1990 in order to evaluate the contribution of public and private investment to GDP per capita Furthermore, Tatom (1991); Eastly & Rebelo (1993) and Wang & Raymond O'Brien (2003) also indicated that public and private sources have different effects on economic growth, of which public investment has less impacts on economic growth than private investment However, according to Greene & Villanueva (1991) and Hadjimichael & Ghura (1995), public investment has created spillover effects on the private sector, and support private investment, then helps the economic growth increase In view of this, Ghura & Goodwin (2000), and Romp & Haan (2007) also argued that public investment has a positive impact on economic growth The research of the Central Economic Commission (2013) focused on analyzing and evaluating the reality of capital investment from state budget in Vietnam The research team has set up a system of indicators to evaluate the efficiency of state budget investment in terms of economic and social efficiency The research used the ICOR coefficient to evaluate the impact of capital investment from the state budget on the economic structure shift through coefficient Cosφ, to assess the impact of capital investment from the state budget on poverty reduction and unemployment reduction by the elasticity coefficient Since then, the research confirmed that the investment from the budget plays a very important role in socio-economic development, contributing to improve the material and spiritual life of the people To evaluate Public investment in relation to private investment in Vietnam, To Trung Thanh (2011) used the Vector Autoregressive Error Correction Model (VECM) to 190 estimate response function with three variables (in the form of logarit) is public sector investment, private sector investment and GDP, the study shows that public investment "overwhelmings" private investment clearly reflected in the period 1986-2010 2.2 Research Methods First, to assess the impact of public investment and private investment on economic economics, the author (i) assesses the contribution to GDP of the province, (ii) evaluates through the ICOR, (iii) the impact assessment for economic transition through Cosφ coefficient, Cosφ coefficient is calculated by the formula: Where: - Si (t) is the weight of sector i at time t - φ is the angle of the two economic vector vectors S (t0) and S (t1), where: ≤0 φ 900 And (iiii) to evaluate the impact on economic growth, the authors use the Solow growth model (1956) and Barro's model expansion (1991), Mankiw et al (1992), and especially Khan & Kumar (1997) Accordingly, the Solow model assumes savings rates, population growth rates, and technological progress being exogenous The two main inputs are capital and labor Khan & Kumar (1997) focused on the role of private capital and public investment; Therefore, these two forms of capital have been distinguished by the authors in their model Accordingly, a Cobb-Douglas production function with production at time t will be: Y(t) = Kg(t)α KP(t)β (A(t)L(t))1-α-β α+β