Tóm tắt Luận án The Official Development Aid (ODA) in the context of Vietnam becoming middle-Income country (MIC)

1 INTRODUCTION 1. The necessary of the study After 30 years of the Renovation, Vietnam has made great achievements in economic development and social progress. Besides its efforts, Vietnam has enlisted the support of international community to promote internal strength along with taking the advantage of all opportunities and overcoming the national difficulties as well as negative impacts of the global economic crisis in order to maintain stability the macroeconomic as well as ensure social security. In the period 1993-2015, with approximately $US 85 billion of the committed capital, $US 72 billion of the signed capital and $US 53 billion of the disbursed capital, Official Development Assistance (ODA) has become a significant source of additional capital with many comparative advantages. Compared to commercial loans on international capital markets, the financial conditions of ODA brings more preferential treatments. Hence, Vietnam can implement a huge of programs and projects of social infrastructure in the areas of health, education, poverty reduction, as well as institutional development and human capacity building. In 2010, the average of Gross Domestic Product (GDP) per capita of Vietnam was $1.168/person1 - higher than the starting level of middle-income countries (as classified by the World Bank). Consistent with the practice of international development assistance, the donors apply the different policies to support the low-income least developed countries group and the middle- income countries group. Becoming a middle-income country has made all the aid policies for Vietnam change. It means the nature, the scope, the structure, the conditions and the method of providing ODA for Vietnam will be different from the last period of Vietnam. With the aim of maximizing the effectiveness of these funds, serving the economic and social development, this apprently leads the needs of the new policy and insitution for ODA in Vietnam. In fact, there was still some limitations and weaknesses in mobilizing and utilizing ODA in recent years presenting in low disbursement ratio has affected the investment performance of some programs and projects. The 1 Reports of the 10th Party Central Committee, Jan 2011 2 2 Congress’s forum and national citizens are concerned about the safety of the public debt, specially the high proportion of ODA debt. The total foreign debts of Vietnam by 31 December 2013, was more than $US 36 billion and accounted by 37,3% GDP2. In order to realize the Government's guidelines on ODA funds and to maintain the needs of deverloping investments as well as to ensure national public debt sustainability in the context of Vietnam becoming MIC, it needs to be changed not only the macro vision and strategy but also the solutions in management and utilization ODA effectively in all levels. These are the new challenges posed to those working in economic research, policy makers and those who implement practices in mobilizing and utilizing ODA in Vietnam. However, so far, no in-depth studies mentioned about this urgent issue above. That’s why this thesis named “The Official Development Aid (ODA) in the context of Vietnam becoming middle-income country (MIC)” has contributed to resolve part of the requirements which set out for the use of these funds in the new stage of the development of country. 2. Research questions The thesis identified four (04) following research questions:
What social and economic achievements does ODA contribute to when Vietnam has become the MIC?
What is the nature, the characteristics, the conditions and the methodolities of providing ODA when Vietnam became a MIC?
Which factors affect to ODA in Vietnam when becoming the MIC?
What are the recommendations for improving the policy framework for ODA in Vietnam when switching to MIC? 3. Research objectives This study has the following targets:
Assessing the impact of ODA to the economic and social areas of Vietnam in general and in the new conditions; 2 No.3 Newsletter of Public Debt, Ministry of Finance, 2014 3
Identifying the factors that influenced to ODA in the context of Vietnam that became a MIC;
Proposing the policy recommendations for ODA in Vietnam as a member of MIC;
Contributing to some aspects of ODA when Vietnam is a MIC through a review of experiences and practices in Vietnam in order to get various, new and updated approaches from the concept, characteristics, trends and academic perspectives. 4. Research Object and Scope 4.1. Research obect The Official Development Assistance (ODA) in the thesis includes the grant aid, concessional loans, the less concessional loans from the governments and international financial institutions. 4.2. Research scope Since the target set out in, the thesis focuses on the 1993-2015 period of ODA, analysing of the emerging issues in the period 2010-2015 (the period when Vietnam began to become middle-income country MIC). The ODA metioned in the thesis has analysised in general, do not go into a in- depth way. In terms of space, the thesis has been researched in the territory of Vietnam; the lessons of international experiences are analyzed based on the reports and available data sources from the regional and international contries having context, economic and social conditions similar to Vietnam. Thus, there can be detected some general aspects which identify ODA in a good way for MIC. 5. New contributions of the thesis The thesis “The Official Development Aid (ODA) in the context of Vietnam becoming middle-income country (MIC)” has some new meaningful contributions in terms of theory and practice. Apart from that, it helps to raise the efficiency of ODA and concessional loans in the new context of Vietnam. Specific: 4 4 Firsly, to contribute to knowledge about development aid in developing countries based on the experience of Vietnam, including:
The thesis describes that the new features in the mobilization and utilization of ODA, in terms of middle-income countries MIC, are moving from “aid” relationship to become “development partners” relationshio. It requires proactive efforts of Vietnam in order to use effectively and then will “deny” ODA in the future.
The thesis has constructed the concept of the Official Development Assistance in middle-income conditions MIC in Vietnam, including the grant ODA, concessional loans and less-concessional loans (preference than commercial loans).
The thesis has identified the rule of ODA along with the development of a country, specificially Vietnam. From there, the thesis develop a roadmap for ODA in Vietnam in parallel with the development process in the middle-income countries. At the same time, the thesis also provides the analysis of: the middle-income country with a “graduation” schedule for ODA, should set up the own strategy for supplying ODA as a “diplomatic tool” and extend cooperation relationship in economic, trade and investment with other the least-developed low income countries.
The thesis has identified the properties of the new factors affecting the ODA in Vietnam with the context of MIC (the economic - political relation as well as the relation of strategic partners and the ownership). The thesis has been interpreted two factor groups affected ODA in Vietnam: (1) factors derived from aid provider (aid strategies and policies of donors, the economy and the political situations as well as the fluctuations that may occur in the donor countries, the international atmosphere and the development of economic-politic relations, between the donors and aid recipients); (2) the internal factor from Vietnam (the economic- political enviroment in Vietnam; the ODA policies; and the ODA absorption capacity of Vietnam). 5 Secondly, base on the factors affecting ODA, analysis the effectiveness in LIC, put in a new context in Vietnam (MIC), the thesis proposed recommendation on ODA policies. 6. Research methodologies In this thesis, both of qualitative and quantitative methods are applied. The quantitative methods is used for assessing the impact of ODA to the development of the economy, the sociaty and the state management. The qualitative method is applied in assessing the factors affecting the ODA in Vietnam. Specifically, the two main methodologies in this thesis are: (1) Desk-study; (2) Interview/Expert consultation. 7. Structure of the thesis Apart from the Introduction, Conclusion, Appendix, List of References the thesis is presented in four chapters: Chapter 1. Literature review Chapter 2. The rationale and practical basis on ODA of a country when becoming a MIC. Chapter 3. Status of ODA in Vietnam in terms of MIC. Chapter 4. The perspective and orientation of ODA in Vietnam in future time. 6 6 CHAPTER 1. LITERATURE REVIEW 1.1. The Official Development Assisstance ODA The Official Development Assisstance includes the ODA capital and the concessional loans from the foreign donors for Vietnam government, which was determined in the Law on Public Investment, is public investment capital, so that becomes the impacted objective of this law. Budget capital for public investment stipulated in this Law includes funds derived from the State budget, government bonds, local government bonds, official development assistance (ODA), overseas concessional loans, government credits for investment and development purposes, retained revenues of the state budget that have not been recorded in the state budget balance and other loans secured by the local budget for public investment purposes3. ODA - a popular perpective in Vietnam - stands for Official Development Assistance. There are many different definitions of ODA from the international organizations and even in Vietnam, ODA is also definitioned in many different ways in some organizations such as the Organization for Economic Cooperation and Development OECD, World Bank, Decree on Management and Utilization of ODA in Vietnam, Law on Public Debt Management 2009. The thesis defined the official development assistance includes the grant aids, concessional loans, less concessional loans from the goverments, the intergovernmental organizations, the organizations in UN (United Nations), the international financial institutions provided for the low-income or developing governments in order to contribute for economomic and social development. 1.2. The Aids in the middle-income countries MIC There are a wide range of opinions on whether or not continuing the aids for MIC and which priority areas should be aided for MIC? 1.3. The factors affecting the aids The researches focus on analyzing: the relationship between the politics and the aids, the relationship between the policy environment and 3 Law on Public Investment 2014. 7 development aid, the relationship between the sponsoring strategies, aid receiving strategies and development fundings. 1.4. Assending the efficiency of development aid Many studies not only pointed out the relationship between the aid and the growth but also indicated the improvement of the aid’s effective. There are, however, still a lot of controversies about that relationship. 1.5. The Official Development Aid in Vietnam It can devide research on ODA in Vietnam into three main groups: The overview of ODA in Vietnam, ODA by the sectors and ODA by the donors. The advantage of these studies are adhesion the international standard concepts as well as the in-depth analysis and the international comparison examples. Besides, there is a plenty of reality analysis, including some perfect lessons for Vietnam. All these reports, in recent time, showed some significant evaluations, the practice lessons and made some basic statements and forecasts about ODA in Vietnam in MIC stages. However, those recommendations are still theoretical and not really suitable for the conditions of Vietnam, especially when Vietnam was a member of MIC. Apart from the managing units’ reports, many of state-level research, there are many scientific research projects, PhD thesis have studied about ODA. Most of those researches has concentrated analyzing the current situations of ODA in Vietnam along with the challenges in the period that Vietnam was not a MIC. Although they had proposed some solutions to improve the efficiency of managing and using ODA, the factors impacting to the efficiency of ODA and ODA management mechanism had not analyzed specificially. In summary, the studies of development aid in the world and Vietnam have mentioned many aspects of theory and practice for mobilization and utilization of ODA in Vietnam. They are the most important input- information for the thesis. However, along with many basic changes of Vietnam (which has become a middle-income country, the change in the funding policy of the international community and the Party’s guidelines and policies in the new context), ODA mobilization and utilization activities require the fundamental changes. The present studies have not really pointed out this urgent issue. Therefore, the implementation of the research 8 8 “The Official Development Assisstance (ODA) in the context of Vietnam which became a middle-income country (MIC)” will contribute theoretical and practical significance for the policy making and management of ODA in Vietnam in the next time. CHAPTER 2. THE RATIONABLE AND PRACTICAL BASIS ON ODA OF A COUNTRY WHEN BECOMING A MIC 2.1. The regularity of ODA in the development process of a country According to the theory of economic growth by Professor W.W Rostow launched in 1961, there are 5 stages of the development process of a country: Traditional society, Preconditions for take-off, Take-off, Drive to maturity and Age of mass consumption. Moving to the preconditions for take-off, and take-off are a turning point marking the beginning of the development process. In this time, the domestic savings is not much meanwhile the investment demands still climb gradually, especially in the infrastructure. The export capacity remains limited, mainly in the agricultural and forest products with low added value, in parallel with the lack of foreign currency for import demand of machinery, equipment and technologies in order to support the process of industrialization. Therefore, a country begining development period has faced to the two deficiencies: the investment capital and the foreign currency. ODA helps to balance these deficiencies. For sustainable development, the ODA recipient countries must be aware of the possibility of repayment in the future. As a result, ODA must be used effectively as well as aiming at increasing the competitiveness of the economy. Another key factor is that national leaders must always think of a time when the country will not need ODA (ODA graduation). To sustainable develop, a country needs to define ODA is only used in the transitional period. To be able to “graduate ODA” in a short time, increasing the domestic savings has to be paid more attention. 9 2.2. The characteristics of the MIC According to World Bank’s classification of a country with the income per capita, there are 4 groups: low-income countries, lower-middle income, upper-middle income and high-income countries. As the classification in 2014, starting from 2015, the middle-income countries must have average GNI per capita from $US 1.045 to $US 12.745; in which, for the low middle-income countries, the average GNI per capita is from $US 1045 to $US 4125 and the high middle-income countries is approximately from $US 4126 to $US 12745. As classified by World Bank and Organisation for Economic Co-operation and Development, Vietnam is among of the countries with low middle-income with GNI per capita in 2010 was $1270 and in 2012 was $15604. 2.3. ODA in a middle-income country - the international experiences and lesson learnt An aid is confirmed as ODA if it three conditions: the resource, the aim and the Grant element. The concessional loans are forms provided loans with preferential terms than the commercial loans, but the Grant element is unqualified 25% of the total aid. ODA has many different types to classify: by aid modalities, ODA providers or ODA conditions. Overall, ODA of MICs is significantly lower than LICs. The proportion of ODA for LICs is 10% by ODA / GNI, for LMICs is 1% and for UMICs is nearly a zero. While MICs has risen spectacularly the needs in development, the international donors are planning to cut down the fianancial aids for MICs. In some cases, the donors are closing aid programs in several MIC. The transition, behaviors and strategies of the recipient countries play an extremely important role in this situation. It is true that the clearer the strategy, the higher ODA’s efficiency, for example Kenya, Thailand. In the contrast, with a unclear strategy, ODA will become a sharp knife and trap that country into a bad debt such as Brazil. 2.4. The Analytical Framework of Thesis 2.4.1. The changes of ODA when Vietnam has become a MIC 4 10 10 In terms of the middle-income country (MIC), the donors have changed the development policy for Vietnam. According that, ODA of Vietnam in MIC context has changed with the following characteristics: The scale of ODA for Vietnam decreased gradually in the period 2011- 2015 and then fell sharply after 2015. The structure of ODA has turned out, while the grant ODA and concessional ODA loans are declining, some donors have opened new channels to provide funding for the less concessional ODA loans. Method of the government cooperation has moved to the direct relationships between entities of the Parties. The government plays a catalytic role in policy and institutions to create a favorable environment for entities, There is a wide range of the aid approaches and modalities will be applied with the extension of the participation of the non-governmental organizations and the the private sectors in the development proces. The division of labor and synergy between all the donors for exploit the comparative advantage that has have an upward trend. The emerging economies and South-South cooperation will add significant resources for development cooperation. 2.4.2. Asseding ODA in Vietnam before and after becoming a MIC Within the thesis, some evaluation criterias chosen to use are: The contribution to GDP growth, the contribution to the total development investment capital of society and FDI attraction; ODA’s support for the acceptance of scientific achievements and modern technologies, the development of human resources, the support for the poverty reduction, the improvment of government management; ODA and the public debt. However, besides the obvious benefits on economic and social development which ODA gives to the developing countries, there are many problems in mobilization and utilization of ODA at both macro and micro level in a lot of the developing countries around the world, including Vietnam. On a macro level, ODA and public debt are “hot’” issues that should be considered carefully. On the micro side, Vietnam has some important issues in the management of ODA such as the limited efficiency of ODA; the low disbursement rate, the wates of some ODA projects. 11 2.4.3. The factors impacting ODA in Vietnam in terms of MIC There are two main groups that affect to ODA when Vietnam is a member of MIC: (1) the factors from the aid donors and (2) the internal factor