Summary of economic doctoral dissertation: Developing industry and trade in Da Nang city

The dissertation is conducted to establish the scientific and practical basis to develop orientation and solutions for industrial and commercial development of Da Nang. It aims to implement goal: Strive to 2020 Da Nang will become an industrial and commercial center of central region - the Central Highlands.

VIETNAM ACADEMY OF SOCIAL SCIENCES

TRAN THI HOA

DEVELOPING INDUSTRY AND TRADE

IN DA NANG CITY

Major: Economics Code: 62.31.01.01

SUMMARY OF ECONOMIC DOCTORAL

DISSERTATION

HA NOI - 2014

VIETNAM ACADEMY OF SOCIALSCIENCES VIETNAM INSTITUTE OF SOCIAL SCIENCES

Advisor:

1 Associate Professor, Dr Dinh Van Thanh

2 Dr Phung Tan Viet

Judge 1: Professor, Dr Do Duc Binh

Judge 2: Professor Science Dr Nguyen Quang Thai

Judge 3: Dr Ho Trung Thanh

This dissertation will be protected in front of Board of

auditorium…… Vietnam Institute of Social Sciences, 477

month….2014

This dissertation can be found at:

- National Library of Vietnam

- Library of Vietnam Academy of Social Sciences

TO DISSERTATION OF THE RESEARCHER

1 MBA Tran Thi Hoa (2010), “State’s Administration for the market system in Da Nang: Situation and Solutions”, Journal of

Da Nang Social- Economic Development, No 5+6/2010, Page

15-21

2 MBA Tran Thi Hoa (2010), “Improving efficiency of market

administration in Da Nang”, Journal of Commerce, No 15/2010,

page 16-18

3 MBA Tran Thi Hoa (2010), “State’s Administration of

business registration in Da Nang City”, Journal of Commerce,

for Vietnam” , Journal of Commerce, no 16/2011, page 18-22

7 MBA Tran Thi Hoa (2012), “Actual Situation of Socio- Economic Development of Da Nang City in period of 2001-1020”,

Journal of Commerce, no 6/2012, page 9-12

8 MBA Tran Thi Hoa (2012), “Actual Situation of Domestic

Trade Development in Da Nang, Journal of Commerce, no

11/2012, page 9-10

9 MBA Tran Thi Hoa (2012), “Evaluating situation of Industry

sector of Da Nang City, Journal of Commerce, no 17/2012,

page 49-50

10 MBA Tran Thi Hoa (2012), “Evaluating contents about state’s management on trade in Da Nang in the international integration period- Approach from view of commercial enterprises”, Summary Record of 2nd International Meeting

“Integration: Chances and Challenges”, Publication”, Statistical Publishing House, Hanoi, page 13-24 Co- author: Dr Phung Tan Viet

development in Da Nang City in International Integration period”, Summary Record of 2nd International Meeting

“Integration: Chances and Challenges”, Publication”, Statistical Publishing House, Hanoi, page 35-54 Co- author: MBA Nguyen Ba Hien

12 MBA Tran Thi Hoa (2012), “Evaluating actual situation of

sustainable development of Vietnam in this period”, Summary

Challenges”, Publication”, Statistical Publishing House, Hanoi,

page 449-463 Co- author: MBA Nguyen Ba Hien

13 MBA Tran Thi Hoa (2013), “Experience of industry development in domestic and abroad as well lessons learned for

Da Nang City”, Summary Record of 3rd International Meeting

“Integration: Chances and Challenges”, part 1 Publication”,

Statistical Publishing House, Hanoi, page 180-189 Co- author: MBA Nguyen Ba Hien

14 MBA Tran Thi Hoa (2013), “Sustainable Industry Development in Da Nang City in this period”, Summary Record

of 3rd International Meeting “International integration: Achievements and Problems”, part 1, Statistical Publishing

House, Hanoi, page.500-517

15 MBA Tran Thi Hoa (2013), “Sustainable development of goods trade in Da Nang City in International Integration

Context”, Summary Record of 3rd International Meeting

“International integration: Achievements and Problems”, part 2,

Statistical Publishing House, Hanoi, page 543-562 Co-author: MBA Nguyen Hoang Tu

16 MBA Do Ngoc My (leader of the topic), Dr Ho Ky Minh,

MBA Tran Thi Hoa (2010), Developing Trade in Da Nang City

to 2010, topic for science research at city level

INTRODUCTION

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 and all 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 Da Nang City People’s Committee, the goal of Da Nang is to build 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 (industry and trade) of

Da Nang has contributed significantly to the GDP growth of the city However, this contribution has not been sustainable, industrial growth

is high but the rate of industrial products with high technology is still low, the trade growth rate is lower than GDP average growth of the city; in general, facilities, infrastructure and technological level of the sector is still backward, slowly innovated; competitiveness of enterprises is low; lack of high quality and uniform human resources; model of industry and trade growth still remains to expand in width; the linking of trade policy and industrial policy in the administration of state about collaboration in making and implementing policies is insensible ; the economic restructuring has been still unsuitable

To make contribution on implementing the goal of building Da Nang to become an industrial city, the center of the distribution sector

in 2020 in the context of building a market economy and economic integration, it requires a comprehensive, systematic study with scientific 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 and commercial development of Da Nang It aims to implement goal: Strive to 2020 Da Nang will become an industrial and commercial center of central region - the Central Highlands

2.2 Research Tasks

- Systematizing, interpreting and contributing rationale for the industrial and commercial development of the province / city under

modern economic theory, it is the theory of development poles and theory of competitiveness advantage

- Analyzing and evaluating scientifically and objectively the actual situation of the industrial and commercial development of Da Nang City in recent years; pointing out the achievements, limitations and causes to make a practical for making orientation and solutions

- Proposing perspective, goals, directions and solutions of industrial and commercial development to make Da Nang City become

an industrial and commercial center of central region in the period to

2020

3 Research Objects and Scope of Dissertation

3.1 Research Objects: The theoretical and practical problems

about industrial and commercial development of Da Nang City under the approach towards sustainable development (paradigms, policies and solutions for industrial and commercial development)

3.2 Scope of the research

- About Content: The dissertation focuses on interpreting rationale

of industrial and commercial development of a city/province; evaluating Da Nang City’s actual development of industrial and commercial goods and proposing uniform solutions to have the rapid and sustainable industrial and commercial development to 2020, striving to become the industrial and commercial center of the region

In which, research on industry development is focused on advanced industry; research on commerce is focused on domestic trade and export-import (import and export) The research linked trade policy (TP) and industrial policy (IP) in the management of state

implementation

- About space: Researching the industrial and commercial

development in Da Nang, however, it is related to considering the factors to make effort in scope of Central- highland Area, East-West

Economic Corridor as well as over the country

- About time: Evaluating the status of industrial and commercial

development in Da Nang City in period of 2001- 2012, proposing orientation and solutions for development to 2020

- About field to do research: Goods Industry and Trade

4 Research Methods of Dissertation

- Using document analysis method to collect information about theoretical basis, previous research, legal policies of the State and Da Nang City about Industry and Trade; actual situation of Industry and trade development of Da Nang City; experience about Industry and Trade Development of some provinces/cities in domestic and abroad

- Method of modeling , collecting, systematizing and generalizing

to analyze and evaluate the actual situation of industry and trade development of Da Nang City, making the comparison and contrast a number of indicators about industry and trade development of Da Nang 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 of mechanisms and policies for Industry and trade development of Da Nang City

- Professional method used in evaluating the factors that have influence, opportunities and challenges, building views, orientating and proposing solutions for industry and trade development of Da Nang 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 socio- economic development of the country has been confirmed in much research (Armand Dayan, HEC, 1973, 2001, 2005) The development of Industry and Trade is driven by many different factors: Production conditions, transportation, management technology, laws and regulations of the state, services providers and especially market conditions (M Benoun, 1993, 2006) Most of the researches in this field focus on the relationship between manufacturers and distributors (Didier Ferrier, 1997); legal prospect and its impact on Industry and Trade activities (Combe, Karin, 2000); fluctuations in the distribution

form (R Mairicourt, 1999); role of the modern distribution in economic development (Noronha Vaz, 1997) In general, the research

is conducted by depth analysis and verifying separate relations of each factor for the Industry and Trade development on the national level or scope of enterprise

Theory “Development Pole” assumes that the points having fast and powerful growth or development have more advantages compared

to the whole region, often gather some industries serve as

"locomotives" which pull, make effects to spread for the development

of the whole region (Francois Perroux, 1950) The problem for regional development planning based on the principle analysis of the development advantages and growth poles in the area (Jacques Raoul Boudeville, 1966).Space Link in regional development (John Friedmann 1966) With the research approach about input- output, the backward linkages and forward linkages concepts are used to do research the sector and inter-branch relations (Hirschman, 1958).The theory of comparativeness advantage determining the benefits of trade

by demonstrating that exchange, with the specialization that it creates, will bring benefits for all the people talking to each other (David Ricardo, 1817) The determinant factors of national competitiveness advantage: The production factors; demand conditions; supporting industries (SI) and relevant sector; company strategy, structure and domestic competition (Michael E.Porter, 1990).Research on rationale for Industry Policy (Chang, Ha - Joon, 1994) The policy issues of international trade and commodity (Bijit Bora, Peter J.Lloyd, Mari Pangestu, 2000).Industry Policy with meaning of the purposeful intervention, consistent with the international principles and practices

of government (Lluis Navarro, 2003) Research on the success of Industry Policy of Singapore (K.Ali Akkemik, 2009)

1.2 Research status in Vietnam

The followings are a number of significant researches: 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 particular angles that dissertation is interested in; there is the research mentioning industry and trade activity in general and briefly, there is the one focusing on one specific angle, specific for each business line, for one task of Industry and trade Until now, there has not had any research about Industry and trade development in Da Nang city in the inter-regional

relations and over the country

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 development process that has

a tight, logical and harmonious combination among three sides of development These are: economic development, social justice and environmental protection

2.1.1.2 Industry and Trade Development

Industry development represents the change process of the industry at this stage compared with earlier stages and often achieves higher levels of both quantity 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 sustainable development of trade activities, promoting socio-economic development of the province /city and country

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

In the development of socio-economic of the province/city, Industry and trade play important role which is shown on the following key aspects: contribution to GDP growth, market expansion, creating jobs and income for residents and serving consumers as well 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, accounting for a large share of

GDP and economic structure of the country Secondly, due to the

requirements of industrialization - modernization of the province/city which requires the Industry and trade development to fulfill the mission of our country in 2020 that Vietnam will become an industrial

country Thirdly, due to the requirements of international economic

of appealing investment capital

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 economic development 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 to Michael Porter, there are four elements

of a nation in forming diamond model: The production factors; demand conditions; supported technology sector and related industries

; company strategy , structure and domestic competition He argues that companies in a nation will be successful in the field that the elements of this diamond shape are favorable This theory can be applied to the study and proposing solutions to create competiveness advantages in Industry and trade development of a province/city, for example; the city’s government can make the strong impact on the elements of this diamond model to improve and upgrade the competitiveness advantages of industry and trade sector; supporting for industry and trade, improve trade and manufacturing technology and related conditions

Theory of Competitiveness advantages of Cities and region

By factors in “diamond shape” Michael Porter has explained the reason why the city or region can develop Industry sector better than other places Applying this theory into Industry and Trade Development of a province/city under the direction: City’s Government needs to have mechanism to create the particular production element (having supported industries development assistance, training labors with high quality and investing on Industry and trade infrastructure)

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 is necessary to strengthen and enhance the role

of government, local government with opener and ready mechanisms

and policies Thirdly, basing on the competitiveness advantages due to

economic geography factors, stable political environment and high ranking business environment, we can choose one industry sector or trade field which has development advantages to become the industry

and trade center of the region and country Fourthly, it is necessary to

build and develop companies with good business strategies, 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 other localities in the region to

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 of Labor s working in Industrial Sector; growth in the quantity 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 of the economy, along with environmentally sustainable development

Content of Trade Development: 1) Domestic Trade Development:

Establishing and developing infrastructure for industrial goods development; specialized developing trade activities; engaging environmental protection to Trade development; diversifying the types

of Trade activities and trade modernization; Trading activities to make contribution on orientation; creation and development of human resources 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 and circulation 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 the province / city in the region and the country; added value of industry sector; number of Labors working in Industry Sector; number of industrial enterprises

and scale of industrial enterprises; 2) Trade: Total retail sales of goods

and services revenue and total wholesale; proportion of total retail sale of goods and services revenue of the province / city in comparison with the region and the country; Added value of industry sector; number of labors working in Commercial sector; number of commercial enterprises and scale of commercial enterprises; total import and export 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 production Value; Proportion of trained labors in Industry Sector; productivity of labors in Industry Sector; industry investment performance; competitiveness of industrial enterprises 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 domestic commerce in comparison with total retail sales of goods and services revenue of the province/city; structure of import and export commodities; productivity of labors working in Trade Sector, proportion of trained labors in Trade Sector; Trade investment efficiency; competitiveness

of the trade enterprise and exporting goods of the province/city; structure of total retail sales of goods and services revenue, wholesale trading and movement of structure between them, trade structure of province/city; average clearance time for export and import 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 of province/ 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 in coordinating 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 and technology innovation, human resource of industry and trade development; management policies and mechanisms 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 industry and trade development have the similar features with Da Nang (Dong Nai, Shenzhen, Shanghai, Singapore, Ho Chi Minh City) Therefore, 10 lessons learned can be applied for Da Nang City

CHAPTER 3 REAL SITUATION OF INDUSTRIAL AND COMMERCIAL

DEVELOPMENT IN DA NANG CITY