developing industry and trade in da nang city

However, this contributionhas not been sustainable, industrial growth is high butthe rate of industrial products with high technology isstill low, the trade growth rate is lower than GDP

1 Rationale of the dissertation

Da Nang is the centrally controlled municipality,which has the strategic position about socio- economic,security - defense of the Central Region - Highland andall over the country According to Resolution No 33 NQ /

TW dated 16th October 2003 of Politburo and Resolution

No 66/2008/NQ-HDND dated 3rd July 2008 of the DaNang City People’s Committee, the goal of Da Nang is tobuild and develop it to become an industrial center,distribution center as well as over country in the period

to 2020

In recent years, trade and industry sector (industryand trade) of Da Nang has contributed significantly tothe GDP growth of the city However, this contributionhas not been sustainable, industrial growth is high butthe rate of industrial products with high technology isstill low, the trade growth rate is lower than GDPaverage growth of the city; in general, facilities,infrastructure and technological level of the sector isstill backward, slowly innovated; competitiveness ofenterprises is low; lack of high quality and uniformhuman resources; model of industry and trade growthstill remains to expand in width; the linking of tradepolicy and industrial policy in the administration of stateabout collaboration in making and implementing policies

is insensible ; the economic restructuring has been stillunsuitable

To make contribution on implementing the goal ofbuilding Da Nang to become an industrial city, thecenter of the distribution sector in 2020 in the context

of building a market economy and economic integration,

it requires a comprehensive, systematic study withscientific basis That is why the researcher chose this

topic: "Developing Industry and Trade in Da Nang City".

2 Purpose and research task of Dissertation

2.1 Research Purpose: The dissertation is

conducted to establish the scientific and practical basis

to develop orientation and solutions for industrial andcommercial development of Da Nang It aims toimplement goal: Strive to 2020 Da Nang will become anindustrial and commercial center of central region - theCentral Highlands

2.2 Research Tasks

- Systematizing, interpreting and contributingrationale for the industrial and commercial development

of the province / city under modern economic theory, it

is the theory of development poles and theory ofcompetitiveness advantage

- Analyzing and evaluating scientifically andobjectively the actual situation of the industrial andcommercial development of Da Nang City in recentyears; pointing out the achievements, limitations andcauses to make a practical for making orientation andsolutions

- Proposing perspective, goals, directions andsolutions of industrial and commercial development tomake Da Nang City become an industrial andcommercial center of central region in the period to2020

3 Research Objects and Scope of Dissertation 3.1 Research Objects: The theoretical and

practical problems about industrial and commercialdevelopment of Da Nang City under the approachtowards sustainable development (paradigms, policiesand solutions for industrial and commercialdevelopment)

3.2 Scope of the research

- About Content: The dissertation focuses on

interpreting rationale of industrial and commercialdevelopment of a city/province; evaluating Da NangCity’s actual development of industrial and commercialgoods and proposing uniform solutions to have the rapid

and sustainable industrial and commercial development

to 2020, striving to become the industrial andcommercial center of the region In which, research onindustry development is focused on advanced industry;research on commerce is focused on domestic tradeand export-import (import and export) The researchlinked trade policy (TP) and industrial policy (IP) in themanagement of state (administration) of developingand coordinating policy implementation

- About space: Researching the industrial and

commercial development in Da Nang, however, it isrelated to considering the factors to make effort inscope of Central- highland Area, East-West EconomicCorridor as well as over the country

- About time: Evaluating the status of industrial and

commercial development in Da Nang City in period of2001- 2012, proposing orientation and solutions fordevelopment to 2020

- About field to do research: Goods Industry and

Trade

4 Research Methods of Dissertation

- Using document analysis method to collectinformation about theoretical basis, previous research,legal policies of the State and Da Nang City aboutIndustry and Trade; actual situation of Industry andtrade development of Da Nang City; experience aboutIndustry and Trade Development of someprovinces/cities in domestic and abroad

- Method of modeling , collecting, systematizing andgeneralizing to analyze and evaluate the actualsituation of industry and trade development of Da NangCity, making the comparison and contrast a number ofindicators about industry and trade development of DaNang with some provinces and cities, with the central-Highland area as well as over the country

- Method of conducting Survey with research objects(enterprises in industrial and commercial sector,

consumers) to analyze and evaluate the status ofmechanisms and policies for Industry and tradedevelopment of Da Nang City

- Professional method used in evaluating thefactors that have influence, opportunities andchallenges, building views, orientating and proposingsolutions for industry and trade development of DaNang City in the period to 2020

CHAPTER 1 OVERVIEW OF RESEARCH ON INDUSTRY AND TRADE DEVELOPMENT IN PROVINCE/CITY

1.1 Research status in abroad

The role of Industry and Trade activities in economic development of the country has beenconfirmed in much research (Armand Dayan, HEC, 1973,

socio-2001, 2005) The development of Industry and Trade isdriven by many different factors: Production conditions,transportation, management technology, laws andregulations of the state, services providers andespecially market conditions (M Benoun, 1993, 2006).Most of the researches in this field focus on therelationship between manufacturers and distributors(Didier Ferrier, 1997); legal prospect and its impact onIndustry and Trade activities (Combe, Karin, 2000);fluctuations in the distribution form (R Mairicourt,1999); role of the modern distribution in economicdevelopment (Noronha Vaz, 1997) In general, theresearch is conducted by depth analysis and verifyingseparate relations of each factor for the Industry andTrade development on the national level or scope ofenterprise

Theory “Development Pole” assumes that the pointshaving fast and powerful growth or development havemore advantages compared to the whole region, oftengather some industries serve as "locomotives" which

pull, make effects to spread for the development of thewhole region (Francois Perroux, 1950) The problem forregional development planning based on the principleanalysis of the development advantages and growthpoles in the area (Jacques Raoul Boudeville,1966).Space Link in regional development (JohnFriedmann 1966) With the research approach aboutinput- output, the backward linkages and forwardlinkages concepts are used to do research the sectorand inter-branch relations (Hirschman, 1958).The theory

of comparativeness advantage determining the benefits

of trade by demonstrating that exchange, with thespecialization that it creates, will bring benefits for allthe people talking to each other (David Ricardo, 1817).The determinant factors of national competitivenessadvantage: The production factors; demand conditions;supporting industries (SI) and relevant sector; companystrategy, structure and domestic competition (MichaelE.Porter, 1990).Research on rationale for Industry Policy(Chang, Ha - Joon, 1994) The policy issues ofinternational trade and commodity (Bijit Bora, PeterJ.Lloyd, Mari Pangestu, 2000).Industry Policy withmeaning of the purposeful intervention, consistent withthe international principles and practices of government(Lluis Navarro, 2003) Research on the success ofIndustry Policy of Singapore (K.Ali Akkemik, 2009)

1.2 Research status in Vietnam

The followings are a number of significantresearches: Associate Professor Dr Pham Vu Luan

(2001), some basic theoretical issues of administration

of Trade in our country in the current period, the

State-level topic Institute of Central Economic Management

(2002), Strengthening coordination between state

administration agencies for service Sector Dr Phung

Tan Viet (2003), Innovation activities of agencies at the

local administration of Trade at Locality in period to

2010, ministerial-level topic Le Huu Doc (2003) , Da Nang City Industry - Situation and Solutions for Development, economic doctoral dissertation Tran Van

Thang (2004), State’s Administration of Trade in current

stage in our country, economic doctoral dissertation.

Nguyen Van Thuong, Kenichi Ohno (2005), Completing

Industry Development Strategy and Technology in Vietnam Peter Naray (Team Leader), David Luff (legal

professionals), Paul Baker (economic expert) (2007),

Evaluating support needs relating to trade in 2007.

Nguyen Manh Hoang (2008), Completing content of

State’s administration of goods trade in Hanoi to 2020,

PhD Economic Thesis Associate professor, Dr Le The

Gioi(2009), Some solutions to develop supported

industries in the area of Da Nang City, ministerial-level

topic People's Committee of Da Nang City (2009),

Development and Planning of wholesale and retail network in the city to 2020, planning and development

of service sector in Da Nang City to 2020, planning and development of industry of Da Nang City to 2020, People’s Committee of Da Nang City (2010), Planning of overall socio-economic development of Da Nang City to

2020 Dr Do Ngoc My (Head of topic) Dr Ho Ky Minh,

Master Tran Thi Hoa (2010) and colleagues, Developing

Trade in Da Nang City to 2020, city –level topic Nguyen

Ngoc Dung (2011), Developing Industrial Zones

uniformly over Hanoi Economic doctoral dissertation.

Phan Thi Thu Hien (2012) , Linking trade policy and

industry policy in the context of international economic integration, economic doctoral dissertation

However, above research only mention particularangles that dissertation is interested in; there is theresearch mentioning industry and trade activity ingeneral and briefly, there is the one focusing on onespecific angle, specific for each business line, for onetask of Industry and trade Until now, there has not hadany research about Industry and trade development in

Da Nang city in the inter-regional relations and over thecountry

CHAPTER 2

SOME MAJOR SCIENTIFIC BASIS ON INDUSTRY AND TRADE DEVELOPMENT IN THE PROVINCE / CITY 2.1 The position, role and necessity of industry and trade development

2.1.1 Indentifying some definitions relating to the development, industry and trade development of the province/city

2.1.1.1 Development and sustainable development

Sustainable development (SD) is a developmentprocess that has a tight, logical and harmoniouscombination among three sides of development Theseare: economic development, social justice andenvironmental protection

2.1.1.2 Industry and Trade Development

Industry development represents the changeprocess of the industry at this stage compared withearlier stages and often achieves higher levels of bothquantity and quality

Trade Development is constantly expanding in size,and synchronization and completion of structure,increasing the pace and quality of trade growth,creating elements to ensure the sustainabledevelopment of trade activities, promoting socio-economic development of the province /city and country

2.1.2 Role of Industry and Trade in economic development of the province/city and country

Firstly, Industry and trade are the integral part of

the economic structure of the province / city and have a

large proportion of that structure Secondly, trade is

the bridge between production and consumption

Thirdly, the industry and trade development is decisive

factor to make the process of industrialization modernization of the entire national economy

-2.1.3 Role of Industry and Trade in economic development of the province/city

socio-In the development of socio-economic of theprovince/city, Industry and trade play important rolewhich is shown on the following key aspects:contribution to GDP growth, market expansion, creatingjobs and income for residents and serving consumers aswell as ensuring social security

2.1.4 The objective necessity of Industry and Trade development in the province/ city

Firstly, due to the location and role of Industry and

trade is considered as the leading industry, accountingfor a large share of GDP and economic structure of the

country Secondly, due to the requirements of

industrialization - modernization of the province/citywhich requires the Industry and trade development tofulfill the mission of our country in 2020 that Vietnam

will become an industrial country Thirdly, due to the

requirements of international economic integration

2.2 Some theories about industry and trade development in the province/city

2.2.1 Theory “Development pole” and its application on industry development of the province/city

Theory “Development Pole” (Francois Perroux, 1950)can be applied to the study and proposing solutions toform development pole as the focused territories inindustry and trade development of a province/city This

is entirely consistent with the Provincial/City limitedresources such as capital, technology, high- qualityhuman resources, market, etc of poor and developingcountries which in need of appealing investmentcapital

2.2.2 Theory about development advantages, competitive advantages and its application on the industry and trade development of the province / city

Economic Geography Advantage Theory

Economic Geography is the science studying

geographical features affecting the process of economicdevelopment of a region consisting of many different countries, a country, a region, a sub-region or a city Applying the economic geography theory on the

industry and trade development strategy planning of the province/city to identify, assess the economic-

geography advantages of the province/ city in

developing industry and trade

Theory of national competitive advantages of Michael Porter (1990) According toMichael Porter, there are four elements of a nation informing diamond model: The production factors;demand conditions; supported technology sector andrelated industries ; company strategy , structure anddomestic competition He argues that companies in anation will be successful in the field that the elements ofthis diamond shape are favorable This theory can beapplied to the study and proposing solutions to createcompetiveness advantages in Industry and tradedevelopment of a province/city, for example; the city’sgovernment can make the strong impact on theelements of this diamond model to improve andupgrade the competitiveness advantages of industryand trade sector; supporting for industry and trade,improve trade and manufacturing technology andrelated conditions

Theory of Competitiveness advantages of Cities and region

By factors in “diamond shape” Michael Porter hasexplained the reason why the city or region can developIndustry sector better than other places Applying thistheory into Industry and Trade Development of aprovince/city under the direction: City’s Governmentneeds to have mechanism to create the particularproduction element (having supported industriesdevelopment assistance, training labors with highquality and investing on Industry and tradeinfrastructure)

From presenting briefly some theories as

above, we can get conclusion as follows: Firstly,

to have a rapid growth, we need to select the area ,region or locality to be growth pole and the rapid growth

of the pole will push and pull the overall growth

Secondly, to become the economic center of the region

or the Industry and trade center of the country, it isnecessary to strengthen and enhance the role ofgovernment, local government with opener and ready

mechanisms and policies Thirdly, basing on the

competitiveness advantages due to economicgeography factors, stable political environment and highranking business environment, we can choose oneindustry sector or trade field which has developmentadvantages to become the industry and trade center of

the region and country Fourthly, it is necessary to

build and develop companies with good businessstrategies, highly competitiveness, attractiveness and

large expansion Fifthly, high-quality human resource is

critical factor, which ensure conditions for development

to become the center of Industry and trade Sixthly, it

is needed to show the central role of the motivation city,creating attractiveness and expansion, engaging otherlocalities in the region to co-develop

2.3 Content, evaluation criteria and the factors affecting the industry and trade development in the province /city

2.3.1 Main Content of Industry and Trade Development in the Province/ city

Content of Industry Development: 1) Industrial

Growth: The value of industrial production and

development index of industrial production value;quantity, yield of Industrial products and quantity ofLabor s working in Industrial Sector; growth in thequantity and scale of industrial production bases,industrial zones, high-tech industrial zones, export

processing zones and industrial clusters (ICs); 2) The

quality of industrial growth: Contribution of total factor

productivity (TFP) has to be high; growth to ensure

enhanced economic efficiency and competitiveness ofthe economy, along with environmentally sustainabledevelopment.

Content of Trade Development: 1) Domestic

Trade Development: Establishing and developing

infrastructure for industrial goods development;specialized developing trade activities; engagingenvironmental protection to Trade development;diversifying the types of Trade activities and trademodernization; Trading activities to make contribution

on orientation; creation and development of humanresources for commercial sector; developing the link of

trade- economic; 2) Import Export Development:

Developing market, business partners, goods sources,direct distribution system of commodity of province/ city

in overseas markets, promoting the trade andcirculation channels of imported goods

2.3.2 Evaluating Criteria of the Industry and Trade Development in the province / City

Scale and growth speed

Evaluating criteria: 1)Industry: Industrial production

value; proportion of industrial production value in theprovince / city in the region and the country; addedvalue of industry sector; number of Labors working inIndustry Sector; number of industrial enterprises and

scale of industrial enterprises; 2) Trade: Total retail

sales of goods and services revenue and totalwholesale; proportion of total retail sale of goods andservices revenue of the province / city in comparisonwith the region and the country; Added value ofindustry sector; number of labors working inCommercial sector; number of commercial enterprisesand scale of commercial enterprises; total import andexport turn-over of goods in the province/city;developing distribution systems

Growth Quality and Development Level

Evaluating criteria: 1) Industry: Contribution of TFP

in Industry Growth; Proportion of Added value of

Industry Sector in comparison with Industrial productionValue; Proportion of trained labors in Industry Sector;productivity of labors in Industry Sector; industryinvestment performance; competitiveness of industrialenterprises and industrial products of the province /city; industrial production value structure and

restructuring; 2) Trade: The contribution of TFP in Trade

growth; proportion of added value of domesticcommerce in comparison with total retail sales of goodsand services revenue of the province/city; structure ofimport and export commodities; productivity of laborsworking in Trade Sector, proportion of trained labors inTrade Sector; Trade investment efficiency;competitiveness of the trade enterprise and exportinggoods of the province/city; structure of total retail sales

of goods and services revenue, wholesale trading andmovement of structure between them, trade structure

of province/city; average clearance time for export andimport goods through the border gate of the city /province

Conditions to assure the sustainable Industry and Trade Development

The assessment criteria: 1) The market development

of industrial product and goods; 2) The synchronization and modernization level of infrastructure systems; 3)

The capacity of the Industry and Trade Connection ofprovince/ city with outside by transportation systems,

logistics networks and investment support service; 4) Quality of policy and its effect; 5) Link of Trade Policy

and Industry Policy in State’s Management incoordinating the establishing and implementing policy;

6) Protect the ecological environment

2.3.3 Factors affecting the development of Industry and Trade in province/ city

The economic geography, political environment–law,development of infrastructure systems, science andtechnology innovation, human resource of industry and

trade development; management policies andmechanisms and other factors.

2.4 Experience of some provinces and cities about industry and trade development and the lessons learned

Dissertations about domestic and abroad industryand trade development have the similar features with

Da Nang (Dong Nai, Shenzhen, Shanghai, Singapore, HoChi Minh City) Therefore, 10 lessons learned can beapplied for Da Nang City

CHAPTER 3 REAL SITUATION OF INDUSTRIAL AND

COMMERCIAL DEVELOPMENT IN DA NANG CITY 3.1 General information of the status of socio- economic development in Da Nang in the past time

3.1.1 Real situation of economic development

Economic growth scope and speed: Average

speed of economic growth of Da Nang city achieved11,45% / year (contributed by 5,52% of capital, 4,18%

of Labor and 1,78% of TFP), much higher than the wholenation’s statistic data (6,96%/ year) in 2011- 2012.However, economic growth pattern of the city is still

growing in breadth

Structure transfer (Finger 3.4)

Source: Annual Statistics of Da Nang city in 2004, 2008,

2012

Figure 3.4 Economic structure, Investment structure and labor structure of Industrial and

trading branches

3.1.2 Some social issues

Every year, Da Nang city creates jobs for about 33thousands of labors rate of poverty decreased to 0.4%

in 2012 Income per capita in 2012 was 47.54 milliondong (6.08 times higher in comparison with 2001 and1.41 times higher in comparison with the wholecountry’s one), contributing 10,911,000 billion dong tothe State Budget in 2012 (1,64 times higher than it in

2007 and 0.94 times higher than 2010)

3.2 Analyzing the status of industrial and commercial development of Da Nang city from

2001 to now

3.2.1 Analyzing the status of industrial development of Da Nang city

Scope and growth speed

1) Value of industrial production (comparative price) Giá trị SXCN (giá so sánh) in the area of Da Nang city

has been continuously increasing with average speed of12.61% /year

2) Proportion of industrial production of the city in comparison with it of the local area and the whole country tends to decrease In 2011, Da Nang city

contributed 1.40% into the whole country’s industrialproduction, following Ho Chi Minh city and Ha Noi Thisrate ranks the 4th in the local area (12.14 %)

3) Growth value of industrial branches rapidly

increased in tẻm of absolute value, reaching to5,039,925 billion dong in 2012 (4,5 times higher incomparison with 2001; 2,22 times and 1,22 times higher

than those in 2005 and 2010), the average growth was14,85%/ year Growth value of industrial branchesincreased in period of 2001- 2005, but decreased in2006-2012

4) The number of labors of industrial branches has

been increasing year by year, achieved 103,149 persons

in 2012 (accounted for 22.09% of labor structure of thewhole city) with the average growth rate of 5.87 %/year

Growth Quality and Development Level

1) Contribution of TFP in Industrial growth: Industrial

growth of Da Nang mainly based on Labor factor(64.88%) and capital factor (20.67%) Low contribution

of TFP (14.45%) confirmed industrial growing pattern ofthe city remaining in breadth

2) Rate of industrial growth value and industrial production value tends to increase in period of 2001-

2012 ( increasing from 27.60% in 2001 to 36.73% in2012), 1.5 times higher than that of the whole country’sstatistic in 2011

3) Average Labor productivity of industrial branches (real price) achieved 68.10 million dong/ capita/ year,

the highest value of branches in the area and 1,38times higher than social labor productivity of the city

4) Rate of trained labors of industrial branches

reached about 55% (in 2012), the highest rate in DaNang city and 1,4 times higher than that of the wholecountry’s statistic data (40% in 2012)

5) Efficiency of using capital of industrial sector:

Production capacity of investment capital is rapidlydecreasing (ICOR: 2.48 in 2001 and 6.54 in 2012)

6) Competition capacity of industrial enterprises and products is low

7) Structure of industrial production and structure transfer: (1) According to economic sectors: transferred

from State Economy to Non-State Economy; (ii)

according to industrial sectors: Processing industry

accounted for an overwhelming rate in sector structure