CAUSES AND EFFECTS OF FOREIGN DIRECT INVESTMENT: BASIS FOR POLICY RE-DIRECTION IN THANH HOA PROVINCE IN VIETNAM _ A DISSERTATION Presented to the Faculty of the Graduate School Southern Luzon State University, Lucban, Quezon, Philippines in Collaboration with Thai Nguyen University, Socialist Republic of Vietnam _ In Partial Fulfillment of the Requirements for the Degree Doctor of Business Administration _ By LE HOANG BA HUYEN (JAMES) December 2013 i APPROVAL SHEET ii CERTIFICATE OF ORIGINALITY iii ACKNOWLEDGMENT The researcher would like to thank Thai Nguyen University, the International Centre Education of Thai Nguyen University, and Southern Luzon State University for guiding him throughout this research, providing him with the opportunity to conduct this research and helping him to carry out the necessary revisions to the thesis He would like to extend his gratitude, specifically to the following: Dr Cecilia N Gascon, President of Southern Luzon State University and Dr Dang Kim Vui, the President of Thai Nguyen University, who made possible the linkage between Thai Nguyen University with Southern Luzon State University, the offering of Doctor of Business Administration, through the ITC-TUAF; Dr Tran Dai Nghia, for his support and supervision throughout his graduate study program His kindness and daily instructions in the last years are greatly appreciated and this dissertation is as much as his work as the researcher; Dr Nguyen Manh An, President of Hong Duc University, his colleagues at the Faculty of Economic and Business Administration, Hong Duc University, and his friends, for their support and encouragement during the the completion of the dissertation; His parents, for giving him constant support and encouragement and for always believing in him; iv His wife, Nguyen Thi Tam, who always support him throughout his study more than anything else; His energetic daughters (Giang Huong and Tra Giang), who provides him laughter whenever he is weary and inspires him to pursue his goal; His dear friends, who instilled within him a love of creative pursuits, science and language, all of which finds a place in this the dissertation; and Finally, he would like to thank the local government of Thanh Hoa Province, foreign companies in Thanh Hoa province for providing him with information to conduct this research, and feedback necessary for making this dissertation successful LE HOANG BA HUYEN v DEDICATION This academic pursuit is dedicated to my parents my wife, Nguyen Thi Tam, and my daughters , Giang Huong and Tra Giang LHBH vi TABLE OF CONTENTS PAGE TITLE PAGE ……………………………………………………………… i APPROVAL SHEET ……………………………………………………… ii CERTIFICATE OF ORIGINALITY ……………………………………… iii ACKNOWLEDGEMENT ………………………………………………… iv DEDICATION ……………………………………………………………… vi TABLE OF CONTENTS ………………………………………………… vii LIST OF TABLES ………………………………………………………… ix LIST OF FIGURES ……………………………………………………… x ABBREVIATIONS ………………………………………………………… xi LIST OF APPENDICES ………………………………………………… xiii ABSTRACT ………………………………………………………………… xiv CHAPTER I II III INTRODUCTION …………………………………………… Background of the Study ………………………………… Objectives of the Study …………………………………… Significance of the Study ………………………………… Scope and Limitations of the Study ……………………… Definition of Terms ………………………………………… REVIEW OF LITERATURE ……………………………… 14 Research Paradigm ……………………………………… 52 METHODOLOGY Locale of the Study ………………………………………… 56 Research Design …………………………………………… 56 Population and Sampling ………………………… ……… 57 Research Instrument ……………………………………… 58 Data Gathering Procedure ………………………………… 59 Statistical Treatment ……………………… …….…… 60 vii IV V RESULTS AND DISCUSSIONS ………………………… 64 Trends of FDI inflows in Thanh Hoa Province from 2001 to 2012 ………………………………………………………… 64 Importance of Various Factors in attracting FDI Inflows in Thanh Hoa Province …………………………………… 69 Data Analysis about the Effects of FDI in the Economic Growth of Thanh Hoa Province ………………………… 77 Analysis of Factors Affecting the Process of FDI in Thanh Hoa Province ……………………………………… 83 SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS Summary of Findings ……………………………………… 90 Conclusions ………………………………………………… 92 Recommendations ………………………………………… 96 REFERENCES ……………………… ………………………………… 98 APPENDICES …………………………………………………………… 102 CURRICULUM VITAE …………………………………………………… 132 viii LIST OF TABLES TABLE PAGE Foreign Direct Investment Project Licensed from 2001 to 2011 …………………………………………………………… 64 Level of Importance of Political, Government and Legal Factors ………………………………………………………… 69 Level of Importance of Social and Cultural Factors ……… 71 Level of Importance of Financial Factors …………………… 72 Level of Importance of Economic and Marketing Factors … 73 Level of Importance of Availability of Resources Factor … 74 Level of Importance of Infrastructure Factors ……………… 75 Results of the Analysis ……………………………………… 76 Important Factors Affecting the Process of FDI Investment in Thanh Hoa Province (Response from the management FDI) …………………………………………………………… 84 Importance of Factors Affecting the Process of FDI Investment in the Thanh Hoa Province (Response from the Civil Servants) ………………………………………………… 85 Factors Affecting the Investment Process of FDI Enterprises in Thanh Hoa Province ………………………… 86 Descriptive Statistics and Correlation ……………………… 88 10 11 12 ix LIST OF FIGURES FIGURE PAGE 2.1 Theoretical Framework ………………………………………… 54 3.1 Data Collection Framework …………………………………… 59 3.2 Assessment Process to Improve the Investment Environment …………………………………………………… 63 4.1 Trends in FDI in Thanh Hoa Province from 2001 to 2012 … 65 4.2 Company Position of the Respondents ……………………… 67 4.3 Company Establishment ……………………………………… 67 4.4 Form of Investment …………………………………………… 68 4.5 Company Group by Size of Capital …………………………… 68 4.6 Types of FDI Business ………………………………………… 68 4.7 Contribution of FDI in Gross Domestic Product (in Bill.VND) 78 4.8 Investment at Current Prices ………………………………… 79 4.9 Employment in FDI Sector of Thanh Hoa Province ………… 80 4.10 State Budget Revenue from FDI Sector ……………………… 82 4.11 Export Turnover of FDI Sector ………………………………… 83 x 121 -+ 0| 102.5 114 1| 31 600.5 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -314.61 -Adjusted variance 274.39 Ho: F43 (qdinh==0) = F43 (qdinh==1) z = -0.694 Prob > |z| = 0.4875 Ranksum F44, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 55.5 114 1| 31 647.5 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -143.69 -Adjusted variance 445.31 Ho: F44 (qdinh==0) = F44 (qdinh==1) z = -2.772 Prob > |z| = 0.0056 Ranksum F45, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 90.5 114 1| 31 612.5 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -315.24 -Adjusted variance 273.76 Ho: F45 (qdinh==0) = F45 (qdinh==1) z = -1.420 122 Prob > |z| = 0.1555 Ranksum F46, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 94 114 1| 31 609 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -237.11 -Adjusted variance 351.89 Ho: F46 (qdinh==0) = F46 (qdinh==1) z = -1.066 Prob > |z| = 0.2863 Ranksum F51, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 116.5 114 1| 31 586.5 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -284.45 -Adjusted variance 304.55 Ho: F51 (qdinh==0) = F51 (qdinh==1) z = 0.143 Prob > |z| = 0.8861 Ranksum F52, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 81 114 1| 31 622 589 -+ Combined | 37 703 703 123 Unadjusted variance 589.00 Adjustment for ties -180.55 -Adjusted variance 408.45 Ho: F52 (qdinh==0) = F52 (qdinh==1) z = -1.633 Prob > |z| = 0.1025 Ranksum F53, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 92.5 114 1| 31 610.5 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -180.55 -Adjusted variance 408.45 Ho: F53 (qdinh==0) = F53 (qdinh==1) z = -1.064 Prob > |z| = 0.2874 Ranksum F61, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 102 114 1| 31 601 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -234.66 -Adjusted variance 354.34 Ho: F61 (qdinh==0) = F61 (qdinh==1) z = -0.637 Prob > |z| = 0.5238 Ranksum F62, by(qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test 124 Qdinh | obs rank sum expected -+ 0| 80.5 114 1| 31 622.5 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -193.12 -Adjusted variance 395.88 Ho: F62 (qdinh==0) = F62 (qdinh==1) z = -1.684 Prob > |z| = 0.0922 Ranksum F63, by(qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 52 114 1| 31 651 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -114.23 -Adjusted variance 474.77 Ho: F63 (qdinh==0) = F63 (qdinh==1) z = -2.845 Prob > |z| = 0.0044 Ranksum F1, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 80 114 1| 31 623 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -38.12 -Adjusted variance 550.88 Ho: F1 (qdinh==0) = F1 (qdinh==1) 125 z = -1.449 Prob > |z| = 0.1474 Ranksum F2, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 92.5 114 1| 31 610.5 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -51.32 -Adjusted variance 537.68 Ho: F2 (qdinh==0) = F2 (qdinh==1) z = -0.927 Prob > |z| = 0.3538 Ranksum F3, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 86 114 1| 31 617 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -42.31 -Adjusted variance 546.69 Ho: F3 (qdinh==0) = F3 (qdinh==1) z = -1.198 Prob > |z| = 0.2311 Ranksum F4, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 62 114 1| 31 641 589 -+ - 126 Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -149.76 -Adjusted variance 439.24 Ho: F4 (qdinh==0) = F4 (qdinh==1) z = -2.481 Prob > |z| = 0.0131 Ranksum F5, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 85.5 114 1| 31 617.5 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -74.78 -Adjusted variance 514.22 Ho: F5 (qdinh==0) = F5 (qdinh==1) z = -2.257 Prob > |z| = 0.0708 Ranksum F6, by(qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 72 114 1| 31 631 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -61.79 -Adjusted variance 527.21 Ho: F6 (qdinh==0) = F6 (qdinh==1) z = -1.829 Prob > |z| = 0.0674 Ranksum ttdtkqh, by (qdinh) 127 Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 80 114 1| 31 623 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -346.86 -Adjusted variance 242.14 Ho: ttdtkqh (qdinh==0) = ttdtkqh (qdinh==1) z = -2.185 Prob > |z| = 0.0289 Ranksum gpmb, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 104 114 1| 31 599 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -188.09 -Adjusted variance 400.91 Ho: gpmb (qdinh==0) = gpmb (qdinh==1) z = -0.499 Prob > |z| = 0.6175 Ranksum ctccq, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 116.5 114 1| 31 586.5 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -317.75 -Adjusted variance 271.25 Ho: ctccq (qdinh==0) = ctccq (qdinh==1) 128 z = 0.152 Prob > |z| = 0.8793 Ranksum tcpdt, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 68 114 1| 31 635 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -210.37 -Adjusted variance 378.63 Ho: tcpdt (qdinh==0) = tcpdt (qdinh==1) z = -2.364 Prob > |z| = 0.0181 Ranksum tdld, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 92 114 1| 31 611 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -134.47 -Adjusted variance 454.53 Ho: tdld (qdinh==0) = tdld (qdinh==1) z = -1.032 Prob > |z| = 0.3021 Ranksum ndldt, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 101.5 114 1| 31 601.5 589 -+ Combined | 37 703 703 129 Unadjusted variance 589.00 Adjustment for ties -139.36 -Adjusted variance 449.64 Ho: ndldt (qdinh==0) = ndldt (qdinh==1) z = -0.589 Prob > |z| = 0.5555 Ranksum tcnhdcs, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 81 114 1| 31 622 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -316.28 -Adjusted variance 272.72 Ho: tcnhdcs (qdinh==0) = tcnhdcs (qdinh==1) z = -1.998 Prob > |z| = 0.0457 Ranksum kstn, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 106 114 1| 31 597 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -162.75 -Adjusted variance 426.25 Ho: kstn (qdinh==0) = kstn (qdinh==1) z = -0.387 Prob > |z| = 0.6984 Ranksum ytmt, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test 130 Qdinh | obs rank sum expected -+ 0| 76.5 114 1| 31 626.5 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -140.34 -Adjusted variance 448.66 Ho: ytmt (qdinh==0) = ytmt (qdinh==1) z = -1.770 Prob > |z| = 0.0767 Ranksum tctt, by (qdinh) Two-sample Wilcoxon rank-sum (Mann-Whitney) test Qdinh | obs rank sum expected -+ 0| 114 114 1| 31 589 589 -+ Combined | 37 703 703 Unadjusted variance 589.00 Adjustment for ties -417.94 -Adjusted variance 171.06 Ho: tctt (qdinh==0) = tctt (qdinh==1) z = 0.000 Prob > |z| = 1.0000 Import excel "D:\Teaching\s_ li_u hành nhà n c.xlsx", sheet ("Sheet1") firstrow clear *(1 variable, 37 observations pasted into data editor) spearman X1 X2 X3 X4 X5 X6 X7 X8, stats(rho obs p) print(0.10) + -+ | Key | | -| | Rho | | Number of obs | | Sig level | + -+ | X1 X2 X3 X4 X5 X6 X7 -+ X1 | 1.0000 131 | 80 | | X2 | 0.6798 1.0000 | 80 80 | 0.0000 | X3 | 1.0000 | 80 | | X4 | 0.1937 0.2173 0.4862 1.0000 | 80 80 80 80 | 0.0852 0.0529 0.0000 | X5 | -0.2652 -0.2173 0.2312 0.2020 1.0000 | 80 80 80 80 80 | 0.0174 0.0529 0.0391 0.0724 | X6 | 0.5459 0.4556 0.3074 0.2529 1.0000 | 80 80 80 80 80 | 0.0000 0.0000 0.0055 0.0236 | X7 | 0.4265 0.3751 0.2748 0.2487 0.5242 1.0000 | 80 80 80 80 80 80 | 0.0001 0.0006 0.0136 0.0261 0.0000 | X8 | 0.4211 0.2257 0.2064 0.4119 0.5573 | 80 80 80 80 80 | 0.0001 0.0441 0.0663 0.0001 0.0000 132 CURRICULUM VITAE Full name Personal Details Le Hoang Ba Huyen Birth date 07/01/1979 Academic degree MA Position/ title Sex: M × ; F Vice Dean Institution & address Hong Duc University 505 Quang Trung, Thanh Hoa City, Thanh Hoa province, Vietnam Department/ division/ faculty Faculty of Economic and Business Administration Office tel (+84) 373 223378 Fax Mobile phone No E-mail (+84) 912222345 huyenhongduc@yahoo.com.vn Educational Qualifications Years Academic institutions 2000 Hanoi Institute of Finance 2008 National Economics University 03/2010 current Academic degree Bachelor of Economics Major/ Specialty Finance – Credit Southern Luzon State University, Philippines (International Joint Graduate Programs at Thai Nguyen University) Finance, monetary circulation and credit Master of Economics Business Administration PhD Student Employment History Job Title Employer Name People’s Officer in Finance committee of Ba department of Ba Thuoc Thuoc district, district, Thanh Hoa Thanh Hoa province province Country of Employment Start month and year End month and year 01/09/2000 Vietnam 30/08/2001 133 Employment History Job Title Employer Name Accountant in Duyen Ha construction company, Ha Noi Lecturer in Hong Duc University Duyen Ha construction company, Ha Noi Hong Duc University Country of Employment Vietnam Vietnam Start month and year End month and year 01/09/2001 30/08/2003 01/10/2003 Current Research Funding Received No Project name Current situation and some solutions to improve management of major state budget expenditure for 135 Project of Ba Thuoc district, Thanh Hoa province Identify the scientific foundation of human resources development in Faculty of Economics and Business Administration to 2020 Current status and some presumptive tax management solutions in the Thanh Hoa city A number of measures seeking to limit motorized vehicles for insurance companies in Thanh Hoa province Funding institution & funded amount Project duration Position/ role in the project Hong Duc University 2008-2009 Project manager Hong Duc University 2007-2008 Investigator Hong Duc University 207-2008 Investigator HongDuc University 2010-2011 Investigator Publications and accomplishments No Authors Name of publication (papers, patents, monographs) Journals/ Publisher ISSN L H B Huyen, Mobilizing investment for socio – economic development in the western Thanh Hoa Journal of Economic & Development, National 1859Economics University, 0012 No 5/2009, pp 44-46 L H B Huyen Proposes some major solutions to enhance the rate of progress to draw the balance sheet on construction and investment for 135 projects in Ba Thuoc District Journal of Finance & Business Administration No 11 0f 2009, pp 22-26 134 10 11 To perfect the management of state budget expenses on L H B Huyen construction and investment for 135 project in Ba Thuoc District The result of Technology - Science preferment in Department of Economic L H B Huyen, and Business L.T.Hanh Administration in Hong Duc University between 2006 and 2010 Developing cultural – ecological tourism in Pu L H B Huyen Luong nature reserving zone in Thanh Hoa province N.V.Tien, L.H.B.Huyen, Finance – Monetary L.T.Hanh, N.C.Nhung Some suggestion to financial management of L.H.B.Huyen, 30a program in Ba Thuoc Lê Quang Huy district, Thanh Hoa province Some solutions to attract foreign direct investment L.H.B.Huyen, (FDI) in Thanh Hoa N.T.T.Xuan province Analyzing the factors affecting the investment of FDI companies in Thanh Hoa province Enhancing the role of internal auditing in preventing risks of foreign N.T.T.Phuong, direct investment in Le.H.B.Huyen, Thanh Hoa province N.T.Huong L.H.B.Huyen, N.T.T.Phuong, N.T Huong L.H.B.Huyen, T.D.Nghia Identification of the main factors affecting the attraction of foreign direct investment into Thanh Hoa province Journal of Science – Hong Duc University 1859No of 2010, pp 96- 2759 102 Reported in The national Conference of the Economic University, Ha noi October 2010 Journal of Science – Hong Duc University 1859No of 2011, pp 114- 2759 119 Text Book, published by Statistical Publishing House, Ha Noi, 2011 Journal of Economic & Development, National Economics University, No 182(II) of 2012, pp 38-44 Science and Technology Journal of Agriculture & Rural Development No 9/2012, pp 160-165 Journal of Economic & Development, No 188(II) of 2013, pp 7681 Socio – Economic information and Forecast Journal,Ministry of Planning and Investment, No.87 – March 2013, pp 33 – 37 Journal of Economic & Development, National Economics University No 190(II) of 2013, pp 34-39 18590012 18594581 18590012 1859 0760 18590012 - 135 REFERENCES Dr Tran Dai Nghia Vice Director, Information Center for Agriculture and Rural Development Group leader, Climate change and Environment Institute of policy and Strategy for Agriculture&Rural Development Email: trannghiadai99@gmail.com Mobile phone: (+84) 945 514 735 Dr Nguyen Manh An President of Hong Duc University 565, Quang trung Street, Thanh Hoa City, Thanh Hoa province,Vietnam Email: nguyenmanhan@hdu.edu.vn Mobile phone: (+84) 903296502 ... growth of Thanh Hoa Province in Vietnam can be formulated This dissertation focuses on the Causes and Effects of Foreign Direct Investment: Basis for Policy Redirection in Thanh Hoa Province in Vietnam”... Title of Research : CAUSES AND EFFECTS OF FOREIGN DIRECT INVESTMENT: BASIS FOR POLICY REDIRECTION IN THANH HOA PROVINCE IN VIETNAM Researcher : LE HOANG BA HUYEN Degree Conferred : DOCTOR OF BUSINESS... general picture of foreign direct investment in Thanh Hoa province from 2001 to 2012 At the same time, it also pointed out the trend of foreign direct investment in Thanh Hoa province during this period