Research purposes and tasks - Research purposes: Based on the theoretical research on the impact of the Government’s promotion policies on science and technology activities and the pra
Trang 1VIETNAM ACADEMY OF SOCIAL SCIENCES
GRADUATE ACADEMY OF SOCIAL SCIENCES
DO THANH LONG
PROMOTION POLICIES FOR ENTERPRISES TO INVEST IN SCIENCE AND TECHNOLOGY OF SOME COUNTRIES AND THE LESSONS FOR VIETNAM
Major: International economics Code: 9.31.01.06
SUMMARY OF ECONOMIC DOCTORAL THESIS
HANOI - 2020
Trang 2The work is completed at:
VIETNAM GRADUATE ACADEMY OF SOCIAL SCIENCES
ACADEMIC SUPERVISORS:
1 Prof., Dr Nguyen Quang Thuan
2 Assoc Prof., Dr Dang Thi Phuong Hoa
1st defence: Assoc Prof., Dr Bui Tat Thang
2nd defence: Assoc Prof., Dr Doan Ke Bon
3rd defence: Assoc Prof., Dr Nguyen Xuan Trung
The thesis will be defended in front of the Academy-level Thesis Assessment Council at………
Thesis can be found at:
National Library of Vietnam Library of the Academy of Social Sciences
Trang 3INTRODUCTION
1 Rationale
During the courses of the nation’s construction and development , our Party has soon identified science and technology as the top national policy, the foundation and driving force of industrialization and modernization of the country Over 30 years of innovation, our country’s science and technology has made a great advancement in building and developing potentials and has gained many important achievements, making practical contributions to socio-economic development, ensuring national defense and security, improving social security and quality of life, bringing our country from an underdeveloped country to the group of middle income countries However, compared to the set objectives and missions, our country's science and technology development has not been commensurate with its potential and position, has not really become a strong driving force for socio-economic development and for avoiding lagging behind other countries in the region and the world International experience shows that the more developed a country in terms of science and technology background, the higher the proportion of investment in science and technology of the non-state sector compared to the state budget The state budget only funds basic research and the research that serves the common national interests [185] In developed countries such as Europe, South Korea, and Japan, this ratio usually ranges from 3: 1 to 5: 1 China has a 3: 1 ratio and tends to increase over time
In Vietnam so far, the state budget is still the main resource, accounting for 52% of total social investment in science and technology [3] It should be recognized that no matter how much the State is interested, the State's resources are also very limited in the current situation with many difficulties, which cannot be compared with the abundant potential of the non-sate sector, especially of the business sector However, in fact, Vietnamese enterprises have not invested properly in science and technology activities because of the lack of appropriate incentive policies and experience in building development models of the science and technology system
Some countries with similar characteristics to Vietnam, despite not starting from a high point, have succeeded thanks to proper investment policies for science and technology such as South Korea, China and Israel
From the above analysis, the author chose the title: “Promotion policies for
enterprises to invest in science and technology of some countries and the lessons for Vietnam” to be the research topic of this thesis
2 Research purposes and tasks
- Research purposes: Based on the theoretical research on the impact of the
Government’s promotion policies on science and technology activities and the practical effect of some countries in the world and in Vietnam, the thesis draws lessons and proposes some solutions to develop promotion policies for enterprises to
invest in science and technology for Vietnam - Specific research tasks:
(i) Providing an overview of research on policies to promote enterprises to
invest in science and technology;
Trang 4(ii) Explaining the role of science and technology, enterprises investing in science and technology, and the policies to promote enterprises to invest in science and technology From there, building an analytical framework for the thesis on the policies to promote enterprises to invest in science and technology;
(iii) Analyzing the case studies of China, South Korea and Israel on the policies to promote enterprises to invest in science and technology;
(iv) Understanding the current status of the policies to promote enterprises
to invest in science and technology in Vietnam Comparing Vietnam and the studied countries to draw lessons that are relevant to the development trend, conditions and the practical situation of Vietnam in the policies to promote enterprises to invest in science and technology
3 Research object and scope
The law and sub-law documents about other promotionpolicies (such as the laws / policies on land, security, defense, ) do not fall within the scope of the thesis research;
Policies to promote enterprises’ other activities (such as enhancing competitiveness, management capacity, financial capacity, ) do not fall within the scope of the thesis research
- Scope of space:
The thesis focuses on researching experiences on policies to promote enterprises to invest in science and technology in China, South Korea and Israel because these are three typical countries in achieving breakthrough development in science and technology via the promotion of investment in science and technology
In some analysis, the thesis uses secondary data of some other countries to get an overview of the research problem
Trang 5The total number of enterprises whose data are used in the situational analysis is 103 enterprises Two of these will be studied in the form of case study
4 Research process
In order to accomplish the research purposes and tasks of the thesis, the PhD student uses the following research process
5 Research methodology
(1) Methods of data collection
* Secondary data collection:
The PhD student studies the thesis topic with the study of secondary data sources from reputable domestic and foreign publications such as articles with ISI, Scopus index; Seminars, doctoral dissertations; Reports, data of the Government and relevant ministries… as well as websites of reputable newspapers, magazines and organizations
Primary data collection
a In-depth interview method
b Questionnaire method
Pilot survey
Evaluate the status of the policy system to promote enterprises to invest in science and technology
Trang 6c Case study
(2) Methods of data analysis
6 New contributions of the thesis
Contributing to systematizing a number of theoretical issues about policies
to promote enterprises to invest in science and technology with an analytical framework consisting of four groups: supply-side policy group, demand-side policy group, supporting factors policy group, affiliate policy group with the parties in the
national innovation system
Identifying the science and technology product supply chain model in the direction of approaching the enterprises’ science and technology start-up projects The supply chain will start from the idea of innovation, go through different stages to the final output when the product is commercialized in the market Types of enterprises with different levels of investment in science and technology will give different results
Comparing Vietnam and the three selected researched countries Evaluating the successes and limitations of each country's policy and from there, drawing lessons for
Vietnam in building policies to promote enterprises to invest in science and technology
7 The structure of the thesis
In addition to the introduction, conclusion, references, appendices; the main content of the thesis is divided into four chapters:
- Chapter 1: Overview of the research on policies to promote enterprises to invest in science and technology
- Chapter 2: Theoretical foundations of the policies to promote businesses to invest in science and technology
- Chapter 3: Policies to promote enterprises to invest in science and technology of China, Korea and Israel
- Chapter 4: Policies to promote enterprises to invest in science and technology of Vietnam and lessons learned from countries around the world
Chapter 1 OVERVIEW OF RESEARCH ON POLICIES TO PROMOTE ENTERPRISES
TO INVEST IN SCIENCE AND TECHNOLOGY 1.1 Factors affecting investment decisions for science and technology
Factors influencing an enterprise's science and technology investment decisions and its effects have been identified in many studies, both in theory and in experiment In a recent study, author Becker (2013) has synthesized and analyzed these studies to draw a picture of our understanding of this problem and challenges for future studies According to Becker, there are 5 groups of factors that affect the level of enterprises’ investment in science and technology , including:
(i) Characteristics of each business and industry
(ii) Competitiveness
(iii) Support policies from the government
(iv) Location and opportunities to access knowledge resources
Trang 7(v) Spread of knowledge from foreign R&D activities
Author Quan Minh Nhut has articles analyzing the current situation and factors affecting the level of science and technology investment in production and business activities of enterprises in Can Tho city in the field of commerce - services (2014) and agriculture(2015) Enterprise survey results show that the proportion of investment in science and technology in the total enterprise’s capital is still relatively low and ineffective According to the author, there are four statistically significant factors affecting investment decisions in science and technology of agriculture enterprises: Equity, efficiency of machinery and equipment, labor and the number of years of operation of the business [36]; and for commerce-service enterprises, there are three impact factors: profit, equity and the number of years of operation of the business [37]
Some other domestic research projects also have contents of assessing the technology status of Vietnamese enterprises, including technological level, export ability and competitiveness of industrial enterprises, science and technology staff of industrial enterprises with the content of scale structure by qualifications and distribution by field of science and technology activity of this force, the situation of scientific research and science and technology innovation of industrial enterprises, the relationship between science and technology research and production and business factors
1.2 Policies to promote enterprises to invest in science and technology:
Further research into the policies of promoting enterprises to invest in R&D the presence of policy groups including direct financial support, tax incentives, science and technology human resource development, investment in science and technology infrastructure development, affiliate policy with the parties in the national innovation system
Direct financial support
In order to solve the financial problem of business innovation projects, many countries have spent a large amount of public funds to minimize debt and capital difference for innovation projects of small businesses A series of policies such as loans, loan guarantees and research grants have been implemented ([175], [93]) Government budgets need to create spillover effects to increase the opportunities to attract foreign investment and to increase budget equity Feldman and Kelley (2006) also confirm that the subsidies received in R&D activities will boost budgets from other sources
Tax incentives
According to Hall and Van Reenen (2000), the tax incentive policy for R&D activities is the portion of tax that businesses can claim to be reduced if they participate in R&D activities, thereby promoting enterprises to invest in this field Tax incentives often affect all businesses in the economy, so private businesses need
to evaluate to choose and determine the type of project they want to register
Science and technology human resource development
Trang 8Romer (1990) proposed a model in which growth is based on research and development results, reflected in the technological changes companies use to maximize profits In Romer's model, there are four basic factors of production: physical capital, labor, human resources and technology This model, or as described
by Valdes (1999) later, growth is more pronounced with a large proportion of human resources in the R&D field
Affiliate parties policy in the innovation system
Kamien (1992)] argues that besides the ability to accessknowledge sources, businesses also benefit from joint research activities with universities Mutual compensation of research capacity helps businesses overcome cost and time barriers
in developing new technologies and products, while universities can benefit from technology commercialization
Therefore, countries that want to develop R&D all aim to improve the research capacity of the universities and research institutes system and promote the linkage between these research centers and the R&D activities of the enterprise sector
1.3 Research gap for the thesis
The domestic and international researches on policies to promote enterprises to invest in science and technology in this Chapter bring good reference value for the thesis, especially in shaping the group of policies to promote enterprises to invest in science and technology that Vietnam can apply to its construction and implementation activities Theoretical studies on basic issues in science, technology, R&D, and innovation are also
a good basis for the thesis when it oriented to the supply chain of science and technology products
Summary of chapter 1
Overview of some researches on policies to promote enterprises to invest in scientific research and technology development in some countries around the world such as the US, South America, Japan, China, South Korea, Israel,… as well as Vietnam Studies show different perspectives on policies that affect investment in science and technology in the enterprise sector The gap of the study is identified as a synthesis view of policies to promote enterprises to invest in science and technology, not just focusing on one or
a few specific policies The thesis studies the policies according to the model of the supply chain of science and technology products starting from the idea of innovation, going through different stages to the final output which is the commercialized product on the market; These policies are divided into groups The evaluation of the effectiveness of the construction and implementation of the policies to promote enterprises to invest in science and technology is based on two perspectives, one of the policy makers and the other of enterprises From there, the thesis will focus on the ineffective policies at each stage, combining with lessons learned from studied countries to make policy proposals suitable for the conditions and practice of Vietnam
Trang 9Chapter 2 THEORETICAL FOUNDATIONS OF THE POLICIES TO PROMOTE ENTERPRISES TO INVEST IN SCIENCE AND TECHNOLOGY 2.1 The role of science and technology in economic growth
There are many empirical studies conducted to calculate the impact of R&D
on growth at all three levels: enterprise, industry, and country / region
At the enterprise level, the rate of return can be measured through the impact
of investments in R&D activities for the productivity growth of the company itself
As calculated by Griliches (1992), by using the data at the enterprise level in the US, the elasticity of output is defined by the percentage difference of output divided by the percent difference of input This is estimated to be about 0.07 That means for every 10% increase in costs for R&D, output will increase by 0.7% In other words, the rate of return for the enterprises’ R&D activities is about 27% [101]
2.2 The role of investment from the enterprise sector for science and technology
Enterprises investing in science and technology are understood as the process in which enterprises use financial resources, physical resources, labor and intellectual resources to conduct science and technology activities to create new products and new technologies or new processes that contribute to increasing labor
productivity, bringing profits to businesses and developing the country's economy
Investing in the research of the application of new science and technology
is a strategy that has helped many businesses create breakthrough in technology, products, branding, production processes, strengthening competitiveness and promoting growth
Thanks to the researches on the role of R&D investment in the enterprise sector, there are more and more developed, developing and middle-income countries,
or low-income countries are focusing on R&D
2.3 Factors affecting enterprise’s investment in science and technology activities
According to Becker (2013), there are 5 groups of factors that affect the level of investment in R&D of enterprises The factors will be analyzed in detail as follows:
2.3.1 Characteristics of each enterprise and industry
2.3.2 Competitiveness
2.3.3 Support policies from the government
The current science and technology policy is also called the innovative science and technology policy [75] People often use the term innovative science and technology policy as a kind of policy, but it can also be seen as three different types of policy "ideas" - science policy, technology policy and innovation policy [142]
2.3.4 Location and opportunity to access knowledge resources
An important factor affecting R&D activities of an enterprise is the geographical distance between it and the sources of knowledge Nobel Prize-winning economist Paul Krugman laid the foundation for the theory of the role of geography
in innovation when arguing that countries could endogenously develop into industrial core zones and agricultural peripheries
Trang 102.3.5 Spreading knowledge from foreign R&D activities
The eclectic theory of multinational enterprises suggests that FDI firms are more technologically advanced than domestic firms and can transfer technology for
in the host country([89], [90], [67])
2.4 Policies to promote enterprises to invest in science and technology
Based on specific policies according to the concept stated by Steinmueller (2010), the PhD student built an analytical framework for the thesis as shown in Table 2.3
Supply-side
policy
- Direct funding for research (basic and applied);
- Financing for development (of technology, prototype products) through tax incentives
- Affiliate parties in the national innovation system
Bảng 2.3 Framework for policy analysis of the thesis
Source: Steinmueller (2010) and author (2019)
2.4.1 Supply-side policy
Supply-side policies focus on financial support policies or direct funding for interprises to carry out R&D activities, and as a result, the MCC (marginal cost curve) shifts to the right, i.e., the enterprise’s investment costs will be reduced The implication of the supply-side policy is to create incentives for enterprises to expand production through tax exemptions and reductions, to increase investment in research and development thus improving production capacity, reducing costs and
Financing policy for technology transfer;
Financing policy for product commercialization (new product development, product marketing)
2.4.3 Support factors policy
(1) Policy on human resources for science and technology
Trang 11According to the FRASCATI Handbook-Guide to R&D statistics of the Organization for Economic Cooperation and Development, R&D human resources include those directly involved in R&D activities or directly supporting R&D activities R&D human resources are divided into three groups:
Group 1: Scientific researchers (researchers/scientists/research engineers) Group 2: Technical staff and equivalent, including those performing tasks requiring technical experience and knowledge in the fields of science and technology
Group 3: Staff who directly support R&D, including administrative staff involved in R&D projects
(2) Policy on science and technology infrastructure
The policies on science and technology infrastructure aim to help establish the foundation and build an environment to support the development of R&D activities Science and technology infrastructure includes technology exchange platforms (helping to develop the science and technology market), knowledge centers, information infrastructure, IT infrastructure, intellectual property protection mechanisms, etc
2.4.4 Affiliate parties policy in the national innovation system
Affiliation policies are policies to create links amongst stakeholders in the supply chain of science and technology products, especially the combined environment between research organizations and enterprises In the affiliation policy, the State plays an important role not only in shaping the strategy and plans for the development of science and technology, but also in leading and creating a
“playground” with appropriate mechanisms to promote enterprises to invest in science and technology
Summary of chapter 2
Chapter 2 studies the theoretical basis of policies to promote enterprises to invest in science and technology Explaining the role of science and technology as a powerful resource , a key driving force for stable and sustainable eoconomic growth Investing in science and technology is also a strategy to help many businesses create breakthroughs in technology innovation, product innovation, branding, production processes, strengthening competitiveness and promoting business growth Analyzing and explaining the factors affecting investment decisions for scientific research and technology development of the enterprise sector On that basis, it explains what governments can do to promote enterprises to invest in science and technology through the policy system Government intervention coupled with its positive effects
on R&D contributes to the effective fiscal policy The Government’s policies to promote enterprises to invest in science and technology are divided into four groups: supply-side policies, demand-side policies, supporting factors policies, and affiliate policies to link parties in the innovation system They correspond to each specific stage of the science and technology product supply chain This will be the theoretical basis of the analytical framework that the PhD student will use to study the international experiences of some countries in Chapter 3, and then evaluate the current status of the policies to promote enterprises to invest in science and
Trang 12technology of Vietnam and suggest lessons that are suitable to the conditions and practice of Vietnam in Chapter 4
A part of this result has been published in the work (2-List of works related to the
thesis)
Chapter 3 POLICIES TO PROMOTE ENTERPRISES TO INVEST IN SCIENCE AND TECHNOLOGY OF CHINA, SOUTH KOREA AND ISRAEL
In this thesis, the PhD student selected three countries: China, South Korea and Israel, to study experiences in the policies to promote enterprises to invest in science and technology This selection is based first on the achievements in science and technology development that the three countries have achieved in recent years, then on the similarities between Vietnam and each country to compare and draw lessons suitable to the actual situation and development conditions of science and technology in Vietnam
3.1 Experience from China
3.1.1 National context
China is the most populous country in the world with a population of over 1.405 billion people With an area of 9,596,961 km², China is the country with the 2nd largest continental area in the world and the country with the 3rd largest total area in the world In terms of public administration, China has 22 provinces, 5 autonomous regions, 4 municipalities and 2 special administrative zones: Hong Kong and Macau [153]
According to the IMF, China's average annual GDP growth for the period of 2001-2010 was 10.5% From 2007 to 2011, China's economic growth was equivalent
to the total growth of the G7 countries As of 2019, China's economy is the second largest in the world in terms of nominal GDP, totaling about $US 14,172 billion according to the IMF The GDP in terms of purchasing power parity reached $US 27,449 billion in 2019
China's investment in science and technology has steadily increased over the years,
from less than 1% of GDP in 2000 to 2,145% in 2017 (Figure 3.1)
Figure 3.1 Proportion of GDP for R&D in China
Source: https://data.oecd.org/rd/gross-domestic-spending-on-r-d.htm (2019)
3.1.2 Government views on promoting businesses to invest in science and technology
Trang 13The Chinese Government considers science and technology development the main driver of sustainable development and hopes to spur an innovation-centered economy in the 2020s The orientation of the Chinese Government in enhancing the reform of the science and technology system is: Focusing on the efficient distribution of science and technology resources and comprehensive integration, creating a breakthrough in industrial innovation; Focusing on the enterprise system with the integration of industry, academia and research to strongly promote the comprehensive construction of …(?) and enhance the nation’s indigenous innovation capacity [180]
3.1.3 Policies used to promote enterprises to invest in science and technology
3.1.3.1 Supply-side policy
“The National Strategy for Mid- and Long-term Science and Technology Development (2006 - 2020)” promotes enterprises to increase R&D spending and enhance their technological innovation capacity through a number of policies: Accelerating the imposition of consumption-based value-added taxes and make industrial payments for equipment purchases prioritized by the deductible value-added tax; Implementing a series of tax holidays, increasing the level of incentive policies, including pre-tax deduction for the R&D costs of high-tech enterprises; Encouraging businesses to set up special funds for R&D activities; Allowing enterprises to accelerate depreciation of tools and equipment used in R&D activities; Issuing a holiday tax policy to purchase advanced scientific equipments [180]
3.1.3.2 Demand-side policy
With the indigenous innovation strategy, the Government develops regulations to implement the Government Procurement Law to encourage and protect innovation of local peoples
3.1.3.3 Supporting factors policy
i) Policy on science and technology human resources
Higher education reform is emphasized, corrective measures have been taken to fulfill the ambitious task of regenerating the education system and developing appropriate human resources In addition, the "Made in China 2025"
program [181] has established a multi-level talent training system
ii) Policy on science and technology infrastructure
China established infrastructure for science and technology through the following activities: Building technology zones, centralized science and technology centers; Establishing and perfecting the promotion mechanism related to intellectual property rights and the IPR transaction system; building a model to develop the science and technology market through the Science and Technology Service Centers under the Technology Market Association, the Shanghai Technology Exchange, the Guangdong Production Center; Paying attention to developing a system of intermediariesand brokers in order to create relationships and to connect supply with
demand, etc
3.1.3.4 Affiliate parties policy in the national innovation system