mobilize investment capital for socioeconomic development of ethnic minorities and mountainous regions of vietnam from 2010 to 2020

GRADUATE ACADEMY OF SOCIAL SCIENCES NGUYEN VAN DUNG MOBILIZE INVESTMENT CAPITAL FOR SOCIOECONOMIC DEVELOPMENT OF ETHNIC MINORITIES AND MOUNTAINOUS REGIONS OF VIETNAM FROM 2010 TO 2020 M

GRADUATE ACADEMY OF SOCIAL SCIENCES

NGUYEN VAN DUNG

MOBILIZE INVESTMENT CAPITAL FOR SOCIOECONOMIC DEVELOPMENT

OF ETHNIC MINORITIES AND MOUNTAINOUS REGIONS OF VIETNAM FROM

2010 TO 2020 Major: Economic Management

Code: 62.34.04.10

BRIEF OF ECONOMIC PHD THESIS

HA NOI - 2014

VIETNAM ACADEMY OF SOCIAL SCIENCE GRADUATE ACADEMY OF SOCIAL SCIENCES

Supervisors:

1 Assoc Prof, PhD Duong Van Sao

2 PhD Tran Minh Yen

Opponent 1: Assoc Prof, PhD Quach Đuc Phap

Opponent 2: Assoc Prof, PhD Bui Quang Tuan

Opponent 3: Assoc Prof, PhD Nguyen Đinh Long

The thesis will be defensed before the Assessment Board of the Academy at Graduate

Academy of Social Sciences at……… 2014

INTRODUCTION

1 Urgency of the topic

Vietnam has more than 54 ethnic groups, including 53 ethnic minorities equal to14.3% of the national population The population lives mostly in 52 povinces and cities.Ethnic minorities and mountainous regions of Vietnam cover ¾ area of the nation and have alot of advantages and potential in agriculture, forestry, hydropower, mines, tourism, importand export and ecological environment

Recognize the importance, Vietnamese Party and State have had many guidelines andpolicies to invest into ethnic minority and mountainous regions It has resulted in manyimprovements in physical and spiritual life of minority and mountainous peoples The proportion

of the poor has been reduced remarkably Socio-economic infrastructure has been strengthened.Education and training have gained lots of achievements Health care has been better and better.Cultural characters of peoples have been preserved and improved National defense, security andsocial order have been guaranteed The above achievements show the consistent policies andintensive take-care of Vietnamese Party, State and the whole political system and contribution ofall people to the socio-economic development of ethnic minorities and mountainous regions

However, beside the said achievements, ethnic minorities and mountainous regionsstill have many problems such as low level of socio-economic development, high disparity incomparion to other regions, and higher rate of the poor and nearly poor households than theoverall average of the country One of the vital reasons of the above problems is lack ofcapital to develop, especially in the Northern midland and mountainous regions The problem

is becoming a huge abstract to socio-economic development of the region This is not only myprivate concern but also the general preoccupation of scientists and managers at all levelsfrom the Center to locals to exploit the available potentials of the region to serve theindustrialization and modernization of the country

From these problems, in the study “Mobilize investment capital for socio-economic

development of ethnic minorities and mountainous regions of Vietnam from 2010 to 2020”,

I choose “Mobilize investment capital for socio-economic development of Northern midland

and mountainous regions and Central Highlands of Vietnam from 2010 to 2020” because

these are two most typical areas Choosing two regions to do PhD thesis is reasonable andnecessary

2 OVERVIEW OF THE STUDY

- In the world

Many scientists spent a lot of time in studying about capital, investment and mobilization

of investment capital and came to important conclusions In the work “The Wealth of Nations”(1776), Adam Smith affirmed: “Saving is the direct cause of capital increase Working makesproduct for saving However, even a lot of products are made, no saving means no capitalincrease” According to C Mac’s opinion in the work “Capital”, saving is the rule of broadenedreproduction To broaden reproduction, input factors need to be strengthened, that means capitalshould be invested” In a famous work of John Maynard Keynes, “The General Theory ofEmployment, Interest and Money”, he improved that it is investment that equals amount ofincome which is not transferred into expenditure At the same time, he also showed that saving isthe surplus of income more than expenditure

In recent years, ethnic minority and mountainous have attracted much concern ofinternational organizations as the World Bank, UN Development Program, etc., to investigateand invest in socio-economic development to reach the goal of poverty reduction

- In Vietnam: (1) scope of economy; (2) scope of ethnic minority and mountainous areas.

Studies on scope of economy focus on public investment, capital mobilization fordevelopment investment and ODA and FDI mobilization Those on scope of ethnic minorityand mountainous areas focus on summarizing the implementation of investment policies forthe regions, assistance poplicies for development of economy, culture and society and povertyreduction, analyzing current situation, shortcomings and reasons of the shortcomings,proposing methods to mobilize capital for socio-economic development in ethnic minorityand mountainous areas The studies approached and researched about capital and otherresources for socio-economic development in ethnic minority and mountainous regions atvarious levels From that, they suggested many new useful study directions

3 Objectives of the study

- Systematize a number of theoretical and practical issues on mobilization ofinvestment capital for socio-economic development, some issues on theories of investment,forecasting capital needs, and some theories of regional development The study alsoinvestigates some experience in capital mobilization for investment and development andregional development policies of several nations in the region and in the world that can beapplied into Vietnam

- Analyze and evaluate the current situation of capital mobilization for socio-economicdevelopment of the Northen midland and mountainous regions and Central Highlands from

2001 to 2010, result of capital mobilization, development trend of capital resources, impacts

of investment capital on economic growth, economic structure movement, budget, and importand export of the regions in stage 2001-2010

- Analyze to clarify relationships and factors (natural conditions, economy, society,culture, etc.,) affacting to capital mobilization for socio-economic development of the regions;the relationship between the result of capital mobilization and subject using the capital

- Propose solutions that are feasible and synchronous on investment policies tomobilize the highest amount of investment capital for socio-economic development of theNorthen midland and mountainous areas and Central Highlands of Vietnam upto 2020

4 Object, scale and lcation of the study

- Objetc of the study: to mobilize investment capital for socio-economic development

of the Northen midland and mountainous areas and Central Highlands of Vietnam upto 2020.

It will show the most typical characters of “Mobilization investment capital for

socio-economic development of ethnic minority and mountainous regions Vietnam from 2010 to 2020”.

- Scale of the study

+ Temporal scale: analyze and evaluate the real situation of capital mobilization of theregions from 2001 to 2010; solutions to mobilize capital for the regions upto 2020

+ Spatial scale: The study is implemented at 2 regions: the Northen midland andmountainous region and Central Highlands These are 2 typical regions for ethnic minorityand mountainous areas of Vietnam

5 Study method

- Methodology: based on the scientific perspectives of Marxism – Leninism, methodology

of dialectical materialism and historical materialism, the views and policies of Vietnamese Partyand State, economic theories, socio-economic policies and regional development theory, etc

- Study method: (1) Information collection; (2) Comparision; (3) Group to statistics;(4) Inheritance; (5) Expert; (6) Forecast

6 Contributions of the thesis

- This is the first systematic study researching in-depth in: investment, developmentinvestment, capital, capital mobilization for socio-economic development; theory ofinvestment and forecasts of socio-economic development capital demand, regionaldevelopment theory, problems of raising investment capital for regional socio-economicdevelopment and regional problems and ethnic minority and mountainous areas in Vietnam

- The thesis analyzes and assesses the status of capital mobilization for economic development of the Northen midland and mountainous region and CentralHighlands in th period 2001 - 2010; analyzes and assesses achievements, limitations, reasons

socio-of the limitations, lessons and the question socio-of capital mobilization for socio-economicdevelopment; and analyzes relationships and the factors (natural conditions, socio-economicconditions, policies and mechanisms to mobilize capital, etc.) that influence to result ofcapital mobilization from 2001 to 2010

- The thesis provides more scientific basis to propose solutions of investment capitalmobilization to develop economy and society in the Northen midland and mountainous areaand Highland of Vietnam to 2020

7 Structure of the thesis

Beside introduction, conclusion, references and appendixes, the thesis includes 3chapters:

Chapter 1: Theory and the fact of mobilization of regional socio-economicdevelopment capital

Chapter 2: The real situation of capital mobilization for socio-economic development

in the Northen midland and mountainous region and Central Highlands

Chapter 3: Solutions to mobilize investment capital for socio-economic depvelopment

of the Northen midland and mountainous region and Central Highlands of Vietnam upto

2020

CHAPTER 1 THEORY AND THE FACT OF MOBILIZATION OF REGIONAL SOCIO-

ECONOMIC DEVELOPMENT CAPITAL 1.1 Theory of socio-economic development capital

- The thesis presented concept of investment and development investment The authorspecializes in researching development investment with the following issues: (1)Characteristics of development investment; (2) Basic information of development investment;(3) Investment capital and capital resource; (4) The role of development investment withgrowth and development (impact on aggregate supply and aggregate demand of economy, oneconomic growth, on economic structure movement, on science and technology, on social

improvement and on environment and impact of economic growth and development oninvestment)

- Some theories on investment: investment multiplier, internal fund theory of

investment, Harrod-Domar model; All theories on investment which are applied have

concerning to socio-economic development investment capital This is an abundant issue For

this reason, the thesis chooses the Harrod – Domar model to forcast the demand of

development investment capital It gives a foundation to define total demand of capital for

regional development and economy development in a certain period From that, the thesisfinds down duties and builds solutions to mobilize investment capital for the development ofwhole economy as well as each region

1.2 Theory on regional socio-economic development

- The thesis gives some concepts: region, regional economy, socio-economic region, ethnicminority and mountainous region, regional socio-economic development

- Some theories concern to regional development: (1) Theory of regional; (2) Theory

of regional development stages; (3) Selection of the motivative field in regional development.There are quite many hypotheses about regional growth However, in the framework of thethesis, the autor only mentions to the theories that relate to resources and function as thefoundation to build solutions to mobilize regional development capital The theories can bereferred or applied Regional study is affected by the following factors: natural conditions(natural resources, geographical position); investment capital; labor; science and technology;cooperation (shows association ability of the region); socio-economic infrastructure; andpolicies

1.3 Theory on mobilization of regional socio-economic dvelopment capital

- The thesis gives some theories on mobilization of regional socio-economicdevelopment capital With different positions, different objects and different characteristics,types of capital mobilization can be classified as follows: (1) Classify according to themobilization sources; (2) Classify according to scope of mobilization sources; (3) Classifyaccording to mobilization time; (4) Classify according to mobilization forms

- The indicators reflecting investment capital mobilization of socio-economicdevelopment are reflected through the volume target, structure of capital investment andefficiency of regional socio-economic development capital: for investment projects, it must beconsidered from two angles, the investor and the economy With economic scope, industries,regionsl or locals, economic and social effectiveness is assessed through criteria: economicperformance, growth of total GDP, the economic restructuring, budget increase, increase of

foreign exchange earnings or export turnover than investment capital having effectiveness inresearching period Social performance: employment, poverty reduction, social and culturaldevelopment, etc

- The relationship between capital mobilization sources and capital users: the studydefines clearly that the relationship not only helps managers set forth resolutions to increaseeffectiveness of capital using but also help policy makers give effective methods to enhancecapital mobilization for socio-economic development

Investment capital for socio-economic development includes:

- Dometic capital: A part of total GDP is used for expenditure The rest is saved Apiece of the saved part is used to pay debt and backup The other part is used for socio-economic development Savings in residential and non-state enterprises is divided a part forbusiness and production, a provision for bringing in bank credit or financial intermediaries.Moreover, investment capital is also mobilized from non-state enterprises and people’scontribution through public labor days

+ Foreign capital: including the oficial development assistance and direct investmentinto Vietnam (ODA and FDI)

- Factors affacting to the mobilization of regional socio-economic development capitalincludes: natural, economic and social conditions, regional and international integration,mechanisms and policies on regional development; role of gavement at all levels from thecenter to local; and national defense and security

1.4 Experience in capital mobilization for development of several nations

The thesis has shown experience in capital mobilization in Korea, China and ASEAN.These are lessons for Vietnam to develop investment policies and management methods andallocate socio-economic development investment capital

1.5 Experience in organizing regional apparatus and regional development policies of some countries

The thesis has shown experience in organizing regional management apparatus andregional development policies of several nations in the world These are lessons for Vietnam

to organize regional apparatus and pay attention to natural conditions, geographic position,development level and socio-economic factors when planning regional development policies

CHAPTER 2 THE REAL SITUATION OF CAPITAL MOBILIZATION FOR SOCIO-ECONOMIC DEVELOPMENT IN THE NORTHEN MIDLAND AND MOUNTAINOUS REGION

AND CENTRAL HIGHLANDS

2.1 Natural, socio-economic and defense characteristics have impacts on capital mobilization at the Northen midland and mountainous area and Central Highlands

- The thesis has presented natural, socio-economic and defense characteristicsaffacting to capital mobilization of the Northen midland and mountainous area and CentralHighlands with the following typicals: (1) This is a vast region with area of 94.862 km2 (account for 29% of whole nation area), special defense position, abundant natural resources(forest, soil, water, mine), and difficult and dissected terrain by block of mountains runningaccording to northwest - southeast direction Hoang Lien Son ranges to 180 km long, 30 kmwide, with a number of high peaks from 2800 to 3000 m It has very harsh climate: in winter,hoar frost and very low temperature appear at, especially at high mountains In summer, thereare many storms, whirlwinds, floods and flood tubes, hail, etc., causing landslides leading to

many difficulties for production and life; (2) About economy: Average economic growth at

all period 2001-2010 was 8.7 %; economic structure had a positive change, agriculture ratedecreased from 39.0 % in 2001 to 35.1 % in 2005 and 30.5 % in 2010, similar to industry andconstruction increased from 31.1 % to 32.1 % and 33.0 %, services increased from 30.0 % to32.8 % and 36,5 %; (3) About society and culture: population is 11,053,545, accounting for12.9 % of the national population In which, there are 6,034,224 people of ethnic minorities,making up 54.6 % of the region population There are 49 peoples living together The largest

is Tay, Thai, Nung, Muong, H'mong; culture and language of Tay, Nung, Thai, Muong, Mongaffect to the regional culture Labor accounts for 49.5 % of the population; untrained workersaccount for 80.5 % Health care and education have improvement of both quantity andquality Material and spiritual life of the people are increasingly improved

- The thesis presented natural, socio-economic and national security characteristics

having impacts on capital mobilization of socio-economic development in the CentralHighlands with features as follows: (1) The Central Highlands is a plateau with abundantnatural resource It has an important strategic position on national security with an area of 54.659 km2 and natural tropical monsoon climate plateau, is divided into two seasons: rainyseason from May to October with humid and cool climate and dry season from November toApril with dry and cold climate The average temperature is about 19 - 200C (2) About

economy: economic growth rate in 2001-2010 period was 8.6 % The economic structure hadpositive changes; agriculture's share decreased from 54.7 % in 2001 to 52.3 % in 2005 and51.1 % in 2010, similar to industry and construction increased from 16.4 % to 19.0 % and22.0 %; services increased from 28.9 % to 28.7 % and 26.9 % (3) About society and culture:population is 5,115,135, accounting for 5.95 % of the national population There are1,805,226 ethnic people accounting for 35.3 % throughout the region There are 46 peoplesliving intertwinedly The largest is Jarai, Ede and Bana Jarai, Ede and Bana culture andlanguage affect to the regional culture; population density is 98 people/ km2 Untrainedworkers account for 82.08 %, which is a large obstacle to socio-economic development of theregion Health care and education are paid interest to invest; people's life is graduallyimproved.

2.2 The real status of capital mobilization for socio-economic development in the Northen midland and mountainous region and Central Highlands from 2001 to 2010

2.2.1 Policies relating to the mobilization of investment capital for the Northen midland and mountainous region and Central Highlands

Vietnamese Party and State have priority concern for investment into ethnic minority

and mountainous regions through a variety of policies in all fields of economics, politics,culture, society, security and defense In the period 1999-2005, there were 86 writtens of theGovernment, the Prime Minister and the ministries and central agencies issued andimplemented for the minorities and mountainous regions In the period from 2006 to 2012,investment policies for ethnic minority and mountainous areas were presented in nearly 160institutions with legal documents including: 14 decrees of the Government, 40 decisions ofthe Prime Minister; 27 documents on approving schemes and policies; 26 joint documentsbetween the ministries, ministerial-level agencies and 51 documents of ministries, ministerial-level agencies Besides, based on the actual situation, the locals built and promulgate activelypolicies for the investment into minority and mountainous regions

Investment policies for ethnic minority and mountainous regions are changing basically andnearer and nearer to the actual It is from the policy of direct support in major to both developmentinvestment and direct support Location and objects in policy system also have important changes,from “easy first, difficult later” to priority to invest and support for the most difficult areas and thepoorest districts in the program fast and stable poverty reduction of 62 poor districts (Resolution 30a).Nowadays, Vietnam has 85 poorest districts

Continouing the first stage of Program 135, policies in the second stage from 2006 to

2010 focused on resolving the most difficult and imperative problems for ethnic minority andmountainous regions to speed up the region, such as: Invest into infrastructure of particularlydifficult hamlets and villages (Program 135 stage II); policy of supporting living land,production land, living house and household water for ethnic minority community havingpoor life (Decision 134, Decision 1592), policy of supporting in doing houses (Decision 167),policy of lending capital (Decision 32 ans Decision 1342), policy of supporting to settleagriculture (Decision 33 and Decision 1342), etc Together with support policies fordevelopment, there are plolicies promulgateenclosed with Decision 24, 25, 26 and27/2008/QD-TTG ensuring combine socio-economic development with security and defense

of these regions, border regions, revolutionary base areas and safety zones The policies forsome ethnic minorities such as Brau, Ro Mam, O Du, Si La, Pu Peo, Sewer, Arrays, La Hu,

Co Lao and the investment policies for agriculture and rural development, education training,medical care for the people, culture, sport, etc., create a relatively comprehensive policysystem, covering the areas around the economics, society, security and defense The policiesare a positive factor to impact on regional development capital raising of minorities andmountainous regions in general and the Northen midland and mountainous region and CentralHighlands in particular

2.2.2 Result of capital mobilization for socio-economic development

2.2.2.1 Social investment capital for socio-economic development nationally and regionaly

The statistics of social capital by region certain disparities between regions CentralHighlands has lowest proportion of structural social capital in the whole country In period2001-2010, total investment capital was 181.679 billion, accounting for 4.2 %; similarly, next

to the Northen midland and mountainous regions with 369.159 billion, accounting for 8.5 %and the Mekong delta region was 609.680, accounting for 14.1 %, North Central and SouthCentral Coast was 911.778 equal to 21.0 %, the Red River delta was 1074836 equal to 24.7

% 27.4% was the South East with 1.190.007 billion Areas with difficult socio-economicconditions have lower propotion than those are more developed (the South East regionaccounted for the highest percentage, 27.4 % in the 2001-2010 period, Red River Deltaaccounted for 24.8 %, the Central Highlands, the Northen midland and mountainous regionhad the lowest rate, respectively, 8.5 % and 4.2 %)

The main causes of the above condition are poor infrastructure, difficult transportation, faraway markets, and low quality of human resources, less attractive investment environment These

are the major causes making investors do not invest much capital for socio-economic development

of the Northen midland and mountainous regions and Central Highlands

2.2.2.2 Mobilize according to socio-economic development investment capital of the Northen midland and mountainous areas and Central Highlands

- Mobilize according to socio-economic development investment capital of the

Northen midland and mountainous areas Total investment capital for the period 2001-2010

is 369.159 billion, in which, 150.567 billion if from budget, accounted for 43.3%, similar tothe state credit is 46.509 billion and 11.9%, state-owned capital is 18,500 billion and 6.4%and that of non-state sector is 313.236 billion and 32.6% FDI is 22,801 billion, accounted for5.9%

- Mobilize investment capital according to Central Highlands Total investment

capital for the period 2001-2010 is 181.679 billion, in which, 57.039 billion if from budget,accounted for 31.7%, similar to the state credit is 36.855 billion and 20.6%, state-ownedcapital is 16.838 billion and 7.7% and that of non-state sector is 66.681 billion and 36.5%.FDI is 6.275 billion, accounted for 3.6%

2.2.2.3 Capital mobilization for economic sectors

In the period from 2001 to 2010, total mobilized investment capital of the Northenmidland and mountainous region reached 369.159 billion VND, including 30.516 billionVND invested in forestry and aquatic production, accounting for 8.3%; 125.478 billioninvested in industry and construction, accounting for 35% Trading and services was 213.165billion and 57.7% The Central Highlands respectively was 181.679 billion VND; 47.590 billionand 26,2%; 64.792 billion and 35,7%; 69.297 billion and 38,1%

2.2.3 Impacts of investment capital to socio-economic development of he region

The thesis presents the impact of investment capital to economic growth, to economyrestructuring, to the budget revenues, to solution and creatation of new jobs for workers, toexport turnover, and to the implementation of poverty reduction goals

2.3 Overall assessment

2.3.1 Achievements

The results of raising capital have met the basic requirements of socio-economicdevelopment and economic growth promotion (annual average growth rate of the Northenmidland and mountainous region is 8.7% and the Central Highlands is 8.6%), whilecontributing to restructure economy towards industrialization and modernization, increase