The necessary of study After nearly 30 years of Doi Moi, Vietnam has achieved number of convincing economic and social achievements. In the period 2001 – 2010, Vietnam’s economy achieved a relatively good growth rate, the average annual gross domestic product increased by 7.26%, in which, the Socio- economic Development Plan 5 years from 2001 to 2005 increased by 7.51% / year, the 5-year socio-economic development plan for 2006 - 2010 increased by 7. This achievement is a good sign of the economic transformation process and is the result of the policies that Vietnam has been implementing before the rapid changes of the world economy, especially the global trend. On the basis of innovations in economic thinking and management reform proposed in the 6th Congress of the Communist Party of Vietnam, in 1987, the 8th National Assembly adopted and promulgated the "Foreign Investment Law at Vietnam "with the goal of continuing to improve the legal environment for production and business activities in general and the legal environment for foreign investment activities in particular.
Vietnam has established diplomatic relations with more than 170 countries around the world, expanding trade relations and exporting goods to more than 230 markets of countries and territories. In addition, Vietnam also participates in international economic and financial organizations such as the United Nations Development Program (UNDP), United Nations Food and Agriculture Organization (FAO), Public Development Organization. the United Nations (UNIDO), the International Labor Organization (ILO), the United Nations 1 Luan van Educational, Scientific, and Cultural Organization (UNESCO), the World Bank (WB),. In particular, the process of international economic integration of Vietnam has taken an important step when it became the 150th member of the World Trade Organization (WTO) in 2007 after 11 years of negotiations.
Since 1988 when the investment law came into effect, along with the open-door exchange policy with international relations, many foreign investors have appeared in Vietnam. The presence of foreign investors (the presence of FDI inflows) has brought our country a huge capital to supplement domestic capital (FDI in Vietnam from 2005 to 2014, an average of about 1,700 billion VND), providing new technology, solving jobs, training human resources and improving management skills. Although certain results have been achieved, there are still many opinions that Vietnam still has not taken advantage of opportunities to attract FDI and has not yet maximized the benefits that foreign direct investment can bring. The basis for the above remarks is the unusual movement of FDI inflows into Vietnam, the ratio of implemented FDI to the registered capital is still low, concentrating FDI in only a few sectors, regions and recruitment capacity.
Vietnam has not been selected as an investment point for most multinational companies with great potential in technology and willing to transfer technology and knowledge. This situation, together with increasingly fierce competition pressure on China and regional countries' FDI attraction, poses a huge challenge for Vietnam. Recognizing the importance of a quantitative approach derived from the above arguments to assess the relationship between FDI and economic growth in Vietnam. Therefore, the research topic in the direction of the models can be estimated, with the title: "The impacts of foreign direct investment on economic growth in vietnam” 2 Luan van 2.
Study’s purpose: Evaluate the impact of FDI on Vietnam's economic growth, thereby offering some solutions to improve the efficiency of FDI utilization. The results in the topic can be used as a reference for specialized teachers and students. At the same time, these results also suggest for managers some macro solutions and policies to attract foreign direct investment to supplement domestic capital resources to promote economic growth. Subjects and scope of study Research object: The impact relationship between FDI and economic growth Scope of research: The topic of measuring the relationship of FDI and economic growth in Vietnam in the period 1995 - 2017, through studying some indicators such as export and government spending (shown by GP).
Study Methods To solve the problems mentioned, the study uses some of the following methods: General research; Descriptive statistics; Quantitative analysis. The specific approach is: - Research documents, analyze the status of FDI, economic growth in Vietnam. - Collect recent FDI data; using the OLS method to assess the impact of FDI on economic growth. The study layout: The study layout includes 5 chapters: Chapter 1: The theoretical basic for FDI and Economic growth Chapter 2: Foreign direct investment and Economic growth in Vietnam Chapter 3: Research methodology Chapter 4: Research results and recommendation 4 Luan van Chapter 1: Theoretical basis for FDI and Economic growth 1.
General theory of Economic growth 1. The concept of Economic growth Economic growth is considered one of the most important issues in economic development research. Most economists agree that economic growth is an increase in income or output calculated for the entire economy over a certain period of time (usually a year). The increase shown in the growth scale reflects a more or less increase, while the growth rate is used with relative comparative significance and reflects a rapid or slow increase between periods.
The economy's income can manifest in kind or value. The income is equal to the value reflected in the indicators of gross domestic product (GDP), gross national income (GNI) and calculated for the whole economy or per capita. There are many different definitions about the quality of economic growth. In a narrow sense, the quality of growth can be understood in terms of one aspect: the efficiency of investment, the evaluation of the ICOR index, or the similarity with the concept of productivity factor, TFP index.
In a broad sense, the quality of growth can advance to the point of sustainable development, focusing on all three elements: economic, social and environmental. The relationship between development and growth is a reciprocal relationship, complementing each other, while maintaining the principle of economic growth is an important element of development. Growth in quantity but not maintained stable and not accompanied by improvements in welfare lead to the development objectives are not achieved. Thus, when studying the growth process, it is necessary to fully consider the 5 Luan van two sides of economic growth phenomenon, the quantity and quality of growth.
Some perspective on Economic growth 1. Classical perspective about Economic growth During the seventeenth century and earlier, Thomas Robert Malthus explained that as the supply of food and food increased, the population also increased, even at a faster rate. But in the eighteenth century, when both economies of England and the Netherlands succeeded in raising their average income, under the pressure of population growth and the law of diminishing returns in agriculture, wealth was created faster than population growth rate. Classical theory of economic growth by the classical economists stated that the representative of Adam Smith and David Ricardo that is considered to be the successor has developed Malthus model.
Adam Smith (1723-1790) is regarded as the founder of the economics department and was the first to study the theory of economic growth in a systematic way. In " The Wealth of Nations", he did research on the nature and causes of economic growth and how to promote economic growth through the doctrine of the "value of labor", "The invisible hand" and the theory of income distribution. From early work of Adam Smith, the labor that is used in productive and effective jobs is a source to create value for society and considers capital growth as a determinant of economic growth. Adam Smith's conclusions were accepted by economists until the twentieth century, when the development of economic theory changed the traditional notions and brought economists to support cental planning and Gorverment control, considering it a better way to promote economic growth, especially in developing countries.Marx’s perspective about Economic growth According to Karl Marx, factors affecting the reproduction process are land, labor, capital and technical progress.
Karl Marx was particularly interested in the role of labor in creating surplus value. The labor force for capitalists is a special commodity, the use value of labor goods is not the same as the use value of other goods, because it can create a greater value than its own value, that value is equal to the value of labor power plus the surplus value. Karl Marx said that because capitalists needed more capital to exploit technological advances to improve workers' productivity, capitalists had to divide the surplus value into two parts: a part of consumption for capitalists, partly to accumulate production development and this is the accumulated source of capitalism. Karl Marx rejected the idea of "supply creates its own demand", arguing that the economic crisis is a solution to restore a disordered balance and that the State's economic policies are important to promoting growth, especially the policy of encouraging an increase in existing demand.
The neoclassical perspective about economic growth At the end of the nineteenth century was a period that marked the dramatic transformation of science and technology. A series of scientific inventions were born, along with many precious resources put into exploitation, making the world economy have a strong development step. This transformation had a strong influence on economists, forming a new school of economics that today is called the neo-classical school, headed by Alfred Marshall (1842 - 1924), his main work is the "Principles of Economics", published in 1890, marking the birth of the neo-classical school. 7 Luan van Neoclassical economists reject the classical view that production in a certain state requires certain proportions of labor and capital, they argue that capital and labor are interchangeable and the production process may have multiple combinations of inputs.
At the same time, they believe that scientific and technical progress is a fundamental element to promote economic development. Therefore, attention should be paid to the inputs of production. Neoclassical theory is also called supply-side economics theory. Modern perspective about economic growth Modern economists support the construction of a mixed economy, in which the market directly identifies the basics of economic activity, the Goverment participates in regulation to limit the downside of the market.
Essentially, a mixed economy is the combination of Keynesian economic theory and economic theory in economic regulation. The basic ideas of this study are presented in P.Samuelson's book "Economics" published in 1948. Modern economics conceptualizes economic equilibrium according to Keynesian model, meaning that the balance of the economy is often below the potential, under normal operating conditions of the economy, there is still inflation and unemployment. The Gorvement needs to determine the unemployment rate and the acceptable inflation rate.
This economic equilibrium is determined at the intersection of the aggregate supply and aggregate demand curve. The theory of modern economic growth holds that the market is the fundamental factor regulating the operation of the economy. The interaction between total supply and aggregate demand creates real income, jobs - unemployment, price - inflation rate, which is the basis for solving three basic 8 Luan van problems of economy: What to produce? For whom to produce? How to produce? On the other hand, the Government plays an important role in the expansion of the market economy that requires the intervention of the Government, not only the market has disabilities but also the society sets a target that even though the market is operating well, it cannot meet the target. Factors affecting economic growth According to modern studies on economic growth, factors affecting economic growth can be divided into two groups: the group of economic factors and the group of non-economic factors.
Within the scope of the study, author only do research on economic factors. Economic factors are the resources that have a direct impact on the input and output variables of the economy. Represent that relationship by constructing the general function as follows: Y = F (Xi) (1.1) In which: Y is the output value., n) are variables that represent the value of economic factors that directly generate output value.