A STUDY ON IMPACTS OF STATE-OWN INVESTMENT ON

SOCIAL INFRASTRUCTURE IN NORTHWESTERN VIETNAM

MA. Nguyen Van Dai

dainv@neu.edu.vn
Faculty of Planning and Development,
National Economics University, Hanoi, Vietnam
Dr. Bui Trung Hai
haibt@neu.edu.vn
Political and Student Affairs Office,
National Economics University, Hanoi, Vietnam
MSc. Deo Thi Thuy
deothuy@gmail.com
Faculty of Political Theory, Tay Bac University, Son La, Vietnam
Dr. Phan Thi Thu Hien
hienttneu@gmail.com
Faculty of Investment, National Economics University, Hanoi, Vietnam

Abstract
The Northwest region is a difficult area of the whole country, although it is
invested from the budget with a large capital. This fact stems from the characteristics of
topography and low starting point in socio-economic development as well as the
effectiveness of state-owned investment in the Northwestern area is still limited, low
social spillover. The data used in this study consists of 2 parts: secondary data from the
General Statistics Office of Vietnam and reports from the provincial authorities in the
Northwest Region. In addition, primary data from the authors' survey is also used to
analyze the impacts of social infrastructure investment based on the perceptions of
beneficiaries. The main findings from this study include: Spillover effects from investment
in social infrastructure are not commensurate with investment resources; The contribution
of social infrastructure investment to social aspects remains unsustainable.
Key words: Investment, social impact, state-own investment, social infrastructure

1. Introduction
Two economists Paul Samuelson and William Nordhaus argue that investment
is a sacrifice of present consumption to increase future production due to an
expansion in capital stock. Investment includes tangible capital (factories,
machines...), invisible capital (intellectuals, labor force...). Social infrastructure is a

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combination of facilities, places, spaces, programs, projects, services and networks
that maintain and improve living standards and quality of life in the community.
More specifically, social infrastructure includes housing, scientific facilities,
schools, hospitals, cultural and sports facilities... and equipment in sync with them.
This is an essential condition to serve and improve the living standards of the local
citizens, fostering and developing human resources in accordance with the process of
industrialization and modernization of each country. Thus, social infrastructure is a
collection of a number of sectors with a nature of social services meeting basic needs
of human beings. The products they create show up in the form of services and are
often public, linked to human development both physically and mentally.
Infrastructure investment tends to be large, costly and long-term so that the
private sector cannot sustain them. Therefore, the government will play an important
role in planning, delivering infrastructure through public investment (Aghion et al.,
2013). However, in recent years, public-private cooperation initiatives have been
built to sustain and finance large projects such as new demand and technology among
rich countries while poor countries in the Global South are frequently in lack of
investment to afford high demands of public infrastructure, particularly roads and
schools. The private sector and multilateral organizations can also play a role in
providing valuable supervision and technical expertise to these infrastructure
projects, forming an important component to successful completion.
Calderon, Moral-Benito and Serven (2011) conducted an empirical assessment
of the long-term output elasticity of infrastructure covering 88 countries between
1960 and 2000. By correlating GDP with human capital, physical capital, and
infrastructure measurement, they indicated that output elasticity of infrastructure is
statistically significant ranging from 0.07 to 0.10. Similarly, Canning and Bennethen
(2000) used panel data from 62 countries during the 1960-1990 period. By achieving
a constant return to scale, the output elasticity of the public physical infrastructure is
measured at 0.09 for road and power, respectively.
In the case of Vietnam, the Northwestern region accounts for a relatively high
proportion of public investment with the aim to tackle the developmental issues such
as hunger and extreme poverty, high drop-out rate, poor access to healthcare system,
low quality of cultural and social facilities. However, the social impacts of this type of
investment are the big question for policy makers and local authorities.
Research Methodology
In this study, the authors used literature review as one of the main methods
coordinating with qualitative analysis to study the impacts of social infrastructure
investment on social aspects of the Northwest Region. The data used in this study

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consists of two types: (i) Primary data from surveying people in the Northwest on the
impact of investment in social infrastructure on their access to basic needs including
education, healthcare, cultural activities… Further, authors attempted to engage some
local citizens for in-depth interviews to explore deep insights into social impacts of
public investment on community life; (ii) Secondary data from the 2017 Yearbook
and the reports on socio-economic infrastructure investment of the Northwest of
Vietnam provided by local authorities.
2. Research results and discussion
Improved but unsustainable access to education at all levels
Education in the Northwest is closely correlated with the characteristics of the
terrain and population distribution of the region. Provinces in the Northwest are all
mountainous provinces with complex and difficult terrain. Therefore, investing in
infrastructure development in education in the Northwest region is more difficult than
the national average.
Figure 1: Student-teacher Ratio among Northwestern Provinces
Unit: %

National average 20.3 17.6 16.7

Central Highlands 18.6 16.8 16.4
Hoa Binh 15.3 12.9 16.6
Son La 17.8 17 19.5
Lai Chau 14.2 17.2 13.5
Dien Bien 15 16.1 13.9
Yen Bai 19.5 18.4 17.5
Lao Cai 13.6 14.9 15.6
0 10 20 30 40 50 60

Student-teacher ratio (Primary) Student-teacher ratio (Secondary)

Student-teacher ratio (High school)

Source: Yearbook of GSO, 2017 and socio-economic yearly reports of

Northwestern provinces
The results of public investment in educational infrastructure represent mainly
in the increase of schools, classes and conditions to ensure the teaching - learning
process of teachers and students. Figure 1 shows three main indicators, including the
proportion of student/teacher in primary, secondary and high school levels. It can be
seen that this ratio at all 3 levels is 'more ideal' than the common level of the whole
country and the Central Highlands, despite the difficulty of topography and education
in the remote and mountainous areas where majority of ethnic groups live.

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 Figure 2: The Number of Student in each Class in Northern Vietnam

45
40
35
30
25
20 40.7 41.5
37.3 38.1
34.4 34.2 35.8 35
33.9
31.632.3 32.131.8 33.7
15 30.3 28.3 28.7
25.2 26.3
21.7 20.9 22.4
10 20.1 20.1

5
0
Lao Cai Yen Bai Dien Bien Lai Chau Son La Hoa Binh Central National
Highlands average
Student/class (Primary) Student/class (Secondary) Student/class (High school)

Source: Yearbook of GSO, 2017 and socio-economic yearly reports of

Northwestern provinces
Similar to the student / teacher ratio, the percentage of students in a classroom in
the Northwest region is quite small. The low number of students in the classroom can
help teaching - learning better. This rate is lower in the Northwest than the national
average and the Central Highlands, except for Son La and Yen Bai.
This result can be explained by the current situation of educational
infrastructure investment in the Northwest as follows:
 The infrastructure and classrooms continue to be invested with the planning
scheme of the school and class network and the new rural construction program,
especially for educational institutions in the highlands, areas with extremely difficult
socio-economic conditions, boarding and semi-boarding schools for ethnic minorities.
 Schools associated with tourism, business, multicultural schools in the
community... have promoted advantages, achieved initial significant results,
important in promoting and improving the quality of comprehensive education,
management innovation, educational methods in the spirit of fundamental reform of
education comprehensively; proactively and actively studying and directing activities
of approaching the reform of the general education program (Lao Cai)
 Scale and system of school networks are increasingly expanding to
residential areas, meeting the learning needs of children in ethnic minority areas of

535
the province. All communes have preschools, primary and secondary schools;
districts and cities all have high schools, vocational education and regular educational
centers. Education and training continue to receive the attention of the whole
economy; the network of schools and classrooms continues to be expanded.
 Consolidating investment in schools and classrooms: Although the
concretization rate varies among the Northwestern provinces, the results show
positive signs. Specifically: The school consolidation rate reached 57.8% (Dien
Bien); 59.1% (Son La); 83.7% (Hoa Binh); 62.8% (Lao Cai) ...
Figure 3: Main reasons for limited access to schooling
Unit: %

26

35

44

Stay home as a labor Tough transportation No schools avai lable

The education of the Northwest region is particularly concerned because it is

the region with the highest concentration of ethnic minorities in the country with high
illiteracy and dropout rates as well as low enrollment rates. Despite the fact that the
size of a student class, the student / teacher ratio is good compared to the national
level and many other regions but that only reflects a minimal part of the impact of
education infrastructure investment. The reason for the difficulty in access to
education is evident in the results of the survey. 26% of respondents said that they
need to stay home as family labor and 30% revealed the lack of schools nearby. As a
result, these causes became a tough barrier for education access at the high school
level. Meanwhile, 44% of respondents said that transport infrastructure that is not
convenient to move to educational institutions is one of the main causes of barriers in
education. Obviously, improvement in school facilities if not accompanied by
transport infrastructure from home to school, the impact will be limited according to
the perceived perspective of the beneficiary of education.

536
 “My home is quite far from school, in particular high school. It often takes me
2 hours to get to school by bike because the road quality is poor. I was born in a
so poor family that my parents cannot afford relatively expensive school fee in
private educational institution. That is why I have to attempt to attend school with
much more effort”
Song Pao Mua, aged 17, Son La

Uneven results in healthcare

Considering the common level of the whole country on the community-based
healthcare system, the Northwestern region is the top priority area to focus on with
higher level of development investment because there are many extremely difficult
communes. In parallel with this fact, investment capital sources not only focus on
capital from the state budget but also other sources.

Figure 4: Staffs in Healthcare System among Northwestern Provinces

Doctors/10000 populations Health staffs/10000 populations

50.1
50
42.7
40.37 40.33
40

29.7
30
24.88 24.74
22.92

20

10.51 10.98
10 7.75 8.21 7.71
6 5.81 6.23

0
Lao Cai Yen Bai Dien Bien Lai Chau Son La Hoa Binh Central National
Highlands average

Source: Yearbook of GSO, 2017 and socio-economic yearly reports of

Northwestern provinces
In terms of proportion, the ratio of doctors per 10,000 people and the
proportion of health staffs per 10,000 people in the Northwest is much better than the
national average and the Central Highlands. The proportion of doctors per 10,000
people in the Northwest reaches nearly 38 while this rate is only around 25
(nationwide), and 22 (Central Highlands). Meanwhile, the proportion of health staffs
per 10,000 people in the Northwest is 8.52, higher than the Central Highlands (5.81)
and the national average (6.23).

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 Figure 5: Medical Treatment Facilities Accessed by Local Citizens
Unit: %

3
12
26
6

46

At home (shaman…) Communal medical service unit

Private clinic Private hospital
District hospital Provincial hospital (polyclinic)

Prominent in the survey results of people on medical examination and

treatment at health facilities is a group of communal health treatment and traditional
remedies. In particular, the role of commune health centers has been confirmed with
the proportion of 46% of people who regularly go to medical centers when they have
health issues. This demonstrates the positive role of commune-level health care for
people. However, 26% of people surveyed said they still use traditional healing
methods from healers and wizards. The role of private and district hospitals is quite
minimal. This result comes from the fact that long distance as well as transport
infrastructure are still difficult to solve, so a few people use this type of medical
examination at district level or higher.
Another result is also noteworthy that among those who do not seek medical
care at official health facilities, up to 50% are self-treated at home with experience,
25% used advice and medical assistance is not clear enough to help them seek medical
or treatment facilities. The point is that there has not a home-based health facility and
high medical examination and treatment fees appear in 20% and 5% of the
respondents in the group who are not treated at the medical facility.
Development of tourism, sport and cultural values
According to the General Department of Tourism, the Northwest region
possesses a great potential of tourism with great nature, unique culture and legendary
history. Naturally endowed with a majestic beauty, unique in terrain, climate,
geology, landscapes and ecosystems, the Northwest is a special tourist attraction.
Northwest with Fansipan summit is called the summit of Indochina, is the desire to

538
conquer by many people; Sapa Town in clouds with cool year-round climate; national
landscapes Mu Cang Chai; The vast Pa Khoang Lake is located in the middle of a
majestic natural landscape with rich vegetation and mild climate; Muong Phang forest
is one of national nature reserves with many rare and precious animals and plants of
Dien Bien province; Mai Chau valley is peaceful with the colors of plants, rice fields
and interspersed with small houses; Moc Chau plateau is large and beautiful with
many flowers blooming in the Northwest mountains such as flowers, plum blossoms,
cherry blossoms... The beauty of the mountains and the Northwest culture always
urges travelers away from vibrant cities to reach the open, majestic, peaceful and
mysterious heavenly land.
Along with the advantages of landscape, traditional culture of ethnic groups is
also a highlight in the Northwest tourism resources. The Northwest is home to many
ethnic groups such as Tay, Nung, Thai, Muong, Mong, Dao, Kinh, Hoa, Kho Mu,
Lao, Lu, Ha Nhi, Khang, La Hu, Si La, Phu La and Bo Y, Mang, Giay, Xo Dang, Lo
Lo, Pa Tag, Phu La, Co Lao, La Chi... with a large and rich cultural space. Many
ethnic groups still keep intact with their traditional cultural identity in customs,
practices, festivals, costumes, musical instruments, folk songs and dances such as the
Long Tong festival, Khau Vai love market, Then singing, Pi Cap music instrument ...
or in community behavior, housing architecture, village markets... Northwest cuisine
has its own characteristics and differences. Compared to other regions with chicken,
broiled fish, buffalo skin mannequin, buffalo meat and kitchen, Thang Co ...
The result of cultural - sports - tourism group in the Northwest region is
considered a bright spot. In the period 2011 - 2017, the cultural infrastructure, sports
and tourism in the province were paid attention to, so that the cultural, sports and
tourism infrastructure of the provinces have developed, facilitating the organization
of provincial, regional and national scale cultural, sports and tourism activities to
attract domestic and foreign tourists, contributing to improving the spiritual life for
ethnic people in the province.
Many cultural works were built with typical high investment rates such as:
Provincial Sports Training and Competition Center; Provincial multi-purpose
stadium; Provincial stadium; Provincial multi-cultural house; Provincial Museum
House; Provincial Exhibition and Information Center ... with a total investment of
VND 800 billion in Lao Cai for Northwestern National Tourism Year (2017) (Lao
Cai); Lai Chau has a significant improvement in tourism infrastructure, so far the
province has 6 provincial tourist centers. The number of domestic and international
tourists coming to the province has increased continuously, about 240 thousand
people (2017) increased by 2.35 times compared to 2011.

539
 3. Conclusion and policy implications
Based on the results of the analysis of impacts of social infrastructure investment
in the Northwestern Region on education, health, culture, sports and tourism, this study
shows that spillover effect of public investment in social aspect is not commensurate
with investment resources; The contribution of social infrastructure investment to social
aspects remains unsustainable. This is reflected by first, the quality of investment
projects is not guaranteed; secondly, the spreading effect on the beneficiary's life is
limited based people's perception. In addition, this impact is not even making a large
gap between the provinces in the Northwest Region.
The policy implications drawn from the results of this study include (1)
Improve the quality of socio-economic development planning and develop an overall
investment strategy; (2) Investment decentralization needs to comply strictly with the
law and according to the principle of decentralization; (3) Increase investment in
science and technology and develop human resources.
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