English Essay

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Current state of FDI leaves much to desireA survey of the Vietnam Provincial Competitiveness Index finds that the quality of foreign direct investment is low with such characteristics as limited spillover effects and low value production. One of the much-mentioned benefits of FDI attraction is the spillover of technology and management experience via trade and labor relations between foreign-invested firms and their local partners and workers. But the spillover effect of FDI businesses in Vietnam is inconsiderable, according to a survey of the Vietnam Provincial Competitiveness Index (PCI-FDI). The survey shows that just a few of these companies have bought commodities and intermediate services from local counterparts. The loose connection between FDI and domestic enterprises along with the popularity of 100 percent foreign-invested model has engendered few intangible benefits for Vietnam regarding technology and management skill transfer. It seems that the operational model of the majority of FDI companies is only limited to import-assembly-export activities. For a country suffering capital shortage and having abundant labor like Vietnam, the benefits from FDI turn out to short-term. And the role of FDI in contributing to turning Vietnam into a dynamic and creative economy with sustainable development remains modest. Short-term and precarious thinking Local investment promotion agencies have emphasized low labor cost and political stability in Vietnam as the basic advantages when introducing the nation’s potential. But the PCI-FDI survey shows that all FDI businesses highly value 4 factors: low labor cost, political stability, workforce quality and tax and land incentives. They do not care about, or even like, factors that ensure the sustainability of the business environment such as investor protection, contract

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