MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY ------***------ MASTER THESIS CHINA’S SHENZHEN SPECIAL ECONOMIC ZONE MODEL AND RECOMMENDATIONS FOR VIETNAM Specialization: International Trade Policy and Law LE HOANG HUE MINH HANOI - 2023 MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY ------***------ MASTER THESIS CHINA’S SHENZHEN SPECIAL ECONOMIC ZONE MODEL AND RECOMMENDATIONS FOR VIETNAM Major: International Economics Specialization: International Trade Policy and Law Code: 821109 Student name: Le Hoang Hue Minh Supervisor: Associate Professors Dr. Hoang Xuan Binh Hanoi - 2023 i DECLARATION I hereby state that this thesis was entirely carried out by myself under the guidance of my supervisor - Assoc. Hoang Xuan Binh; and that the work contained and the results in it are true by the author and have not violated research ethics. The contents and results of this thesis are completely honest.
The information, data and documents which are collected from various sources for analysis and evaluation have been fully cited in the main content and in the references list of this master thesis as well. I make this commitment with awareness of full understanding that in case any fraud detected in my thesis I will take all responsibility and may face disciplinary actions Hanoi , July 2023 Le Hoang Hue Minh ii ACKNOWLEDGEMENT I would like to take this opportunity to show my sincere gratitude to the people have supported me much during my period of this research accomplishing. First and foremost, I am deeply grateful to my advisor, Assoc. Hoang Xuan Binh, for the unwavering support and guidance throughout my master’s program.
His expertise and patience have been invaluable to me and his understanding for my difficulties during the time I did this research have motivated me alot and have played a crucial role in the success of this thesis. Then, I am also grateful to Foreign Trade University for supplying me with the chance to conduct my research and for all of the resources and support they provided. Last but not least, I am deeply thankful to my family and friends for their love and sustain during this process. Without their encouragement and motivation, I would not have been able to complete this journey.
Hanoi, July 2023 Le Hoang Hue Minh iii TABLE OF CONTENTS DECLARATION. ii TABLE OF CONTENTS. iii LIST OF TABLES. vi LIST OF FIGURES.
vii LIST OF ABBREVIATIONS. viii SUMMARY OF THESIS. Rationales for the research. Research objects and scope.
THEORITICAL BASIC FOR SPECIAL ECONOMIC ZONE 10 1. Concept of Special Economic Zone. Characteristics of Special Economic Zone. The historical emergence of Special Economic Zone.
Roles of Special Economic Zone. Regarding entities in society. Regarding the sustainable development process. Regarding the economic sector.
Regarding the process of industrialization and modernization. Regarding society and the environment. Assessment criteria for Special Economic Zone. Policy and legal regulations.
Influenced factors to the development process of Special Economic Zone .35 CONCLUSION OF CHAPTER 1. CURRENT SITUATION OF SHENZHEN SPECIAL ECONOMIC ZONE. Overview of formation and development of Shenzhen Special Economic Zone. The construction context of Shenzhen Special Economic Zone.
The development of Shenzhen Special Economic Zone. Prominent features of Shenzhen Special Economic Zone. Advantages from geographical location. Government's appropriate policies and legal regulations.
Effective government organizational structure. Evaluating Shenzhen Special Economic Zone. Limitations and causes .62 CONCLUSION OF CHAPTER 2. ORIENTATIONS AND SOME RECOMMENDATIONS FOR VIETNAM.
Similarities between Vietnam and China in SEZs establishment. Overview of establishment of SEZ in Vietnam. Orientation of establishment of SEZ in Vietnam. General development perspectives.
On institution and policy mechanisms. On organization and management systems. On strategic and development goals. Recommendations for Vietnam.
For the development roadmap. For incentives and legal framework. For investment resources and strategic investors. For organization and management.94 CONCLUSION OF CHAPTER 3 .98 LIST OF REFERENCES.
i vi LIST OF TABLES Table 1. Potential Benefits Derived from SEZs. Tax incentives in the Shenzhen Special Economic Zone. Population Growth in the City of Shenzhen SEZ 1979-2006.
FDI Inflows in Shenzhen SEZ and other SEZs in China 1978–2008 .56 vii LIST OF FIGURES Figure 1. The population growth rate of the Shenzhen SEZ 1979 - 2009. Total import and export value in Hong Kong, Shenzhen, Shanghai and Ningbo, 1990- 2014. Shenzhen’s GDP per capita and utilized FDI, 1979–2009.
Shenzhen Stock Exchange Component Index 2000-2022.61 viii LIST OF ABBREVIATIONS BOT Build – Operate – Transfer CIP Comprehensive Industrial Parks Comprehensive and Progressive Agreement for Trans-Pacific CPTPP Partnership ESCWA United Nations Economic and Social Commission for Western Asia EVFTA European Union-Vietnam Free Trade Agreement FDI Foreign Direct Investment FIAS Foreign Investment Advisory Service GDP Gross Domestic Product GDP Gross Domestic Product ODA Official Development Assistance PPP Public - Private Partnership R&D Research and Development SEAU Special Administrative-Economic Zones SEZ Special Economic Zones WTO World Trade Organization ix SUMMARY OF THESIS This master's thesis explores the Shenzhen Special Economic Zone (SEZ) model in China and its potential application in Vietnam. The research is divided into three chapters focusing on the theoretical framework of SEZs, an overview of the Shenzhen SEZ model, and recommendations for policy-making in Vietnam. Chapter 1: Theoretical Framework of SEZs. The first chapter establishes the theoretical foundation of SEZs as a unique economic development tool.
It delves into the historical evolution and key characteristics of SEZs worldwide, analyzing their role in fostering economic growth, attracting foreign direct investment, promoting exports, and creating employment opportunities. Additionally, the chapter explores various SEZ models and their respective strengths and weaknesses to provide a comprehensive understanding of their relevance and adaptability. Chapter 2: Overview of Shenzhen SEZ Model. In the second chapter, the focus shifts to a detailed examination of China's successful Shenzhen SEZ.
This section highlights the historical background and the key factors that contributed to the unprecedented growth and transformation of Shenzhen from a small fishing village into a global economic powerhouse. It analyzes the specific policies and strategies implemented in Shenzhen, such as tax incentives, streamlined regulations, and targeted investments, which facilitated its development into a technology and innovation hub. Furthermore, this chapter evaluates the social and environmental impacts of the Shenzhen SEZ model to provide a balanced perspective. Chapter 3: Recommendations for Policy-Making in Vietnam.
The third and final chapter offers recommendations for Vietnam's policy-makers based on the insights gained from the theoretical framework and the Shenzhen model. Drawing upon the experiences of Shenzhen, this section proposes necessary innovations and adaptations to implement an effective SEZ model in Vietnam. The chapter suggests specific policy measures in areas such as trade and investment facilitation, infrastructure development, human capital investment, and regulatory framework improvements. Moreover, it considers the cultural and socio-economic context of x Vietnam to ensure the proposed SEZ model aligns with the country's unique requirements and long-term development goals.
Overall, this master's thesis aims to provide valuable insights into the potential benefits of adopting a Shenzhen-inspired SEZ model in Vietnam. By understanding the theoretical basis, examining the successful case of Shenzhen, and offering tailored recommendations, it seeks to support Vietnam's economic growth and integration into the global economy. Rationales for the research The term “special economic zone” (SEZ) is a general term encompassing various types of SEZs, and to some extent, specific names such as border economic zones and coastal economic zones in Vietnam, which may have the potential to develop into economic and technological development zones. Nowadays, modern economic zones are established with the aim of promoting trade and are primarily formed in coastal areas along international trade routes.
The fundamental objectives of SEZs are to create high-growth areas with new and stable management methods over the long term, to establish modern, green, clean, and safe living environments, to generate new and high added value within a short period of time to keep up with developed economies, to increase per capita income and contribute to the state budget. Additionally, SEZs will create a favorable investment and business environment, particularly for innovative startups, research and development, emerging and high-tech industries, education, healthcare, high-end tourism and resort services, cultural industries, and the development of port and airport logistics services, as well as trade and finance. Theoretically, SEZs are considered important economic tools for promoting growth and economic integration on an international scale. International economic integration reflects the inherent laws of global economic development, including continuous expansion of economic activities, the free flow of goods worldwide, production factors, and the consolidation of this process through a common mechanism—the market mechanism.
On the other hand, due to the different levels of economic development around the world, there is still a long way to go to transition from a national economy to a global economy. It is necessary to carry out a transitional phase or a smaller scale and select a small area with favorable conditions to implement this process. Some economists believe that as a form of outward-oriented integration, SEZs engage in economic cooperation and integration with the global economy to achieve free trade, implement free economic policies, and exercise administrative 2 privileges within and between the zones and the global economy. SEZs serve as prerequisites, foundations, and demonstrations of a country's potential for global economic integration.
This can be explained as follows: (1) The integration of SEZs with the global economy begins with trade liberalization and transitions to financial internationalization and production integration. (2) SEZs create conditions for the integration of core functions within the zone and between the zone and the global economy, to some extent reflecting comprehensive integration with the national economy and the global economy. (3) The preferential policies of SEZs, such as free trade, free economic policies, and administrative privileges for successful governance structures, will be replicated and ultimately transformed into general principles, or conversely, the general principles of the world will become the special policies of SEZs. The practice has demonstrated the success of the operational model and contributions to the national economic development of many SEZ model.
Some countries have shown numerous successful lessons in developing SEZ model, such as the Shenzhen SEZ model in China. This model emerged in China in the late 1970s, at a time when the national economy was experiencing a downturn and new economic trends were emerging worldwide. The Chinese government quickly recognized the need to reevaluate its development path, understanding the international movement trends. They formulated an open-door strategy with various measures.
Among them, the Chinese government employed a completely new economic model that combined domestic potential with international trends, known as the SEZ model. By 1992, Shenzhen attracted 14% of China's total foreign investment (USD 4. Currently, Shenzhen has become one of the major import and export centers with an advanced production platform. According to Shenzhen Special Zone Daily, with a market capitalization of listed companies of about USD 2.285 trillion in 2015, Shenzhen Stock Exchange ranked as the 8th largest stock exchange in the world and the 4th largest in East Asia and Asia.
3 Based on the achievements of the Shenzhen SEZ model, the Vietnamese government has decided to develop certain SEZs that are appropriate for the requirements of restructuring the economy and closely linked to the new growth model. However, in reality, there are still many difficulties in implementing this model in Vietnam. Recognizing the aforementioned issues, the author has chosen the topic “China’s Shenzhen Special Economic Zone model and recommendations for Vietnam” for the master's thesis. Literature review Extensive research has been conducted on China's SEZs, and numerous renowned works have explored their development models, policies, and outcomes.
Scholars and experts have analyzed the factors contributing to the success of these zones, such as favorable business environments, preferential policies, infrastructure development, and effective governance. The experiences gained from China's SEZs have provided valuable insights and lessons for other countries, including Vietnam.