Hard Urban Questions

Questions Left Unanswered/ Curiosity 

Consultants from enCity ask hard questions, that we ponder about. These curiosities, are very well insights into possible research areas. 

Nguyen Luu Bao Doan is the principal in planning and economics and in charge of Research team at enCity. His primary areas includes land use, location of FDI, urban economics, spatial analysis and

development issues. He has published in Urban Studies, Environmental and Planning B: Planning and Design, Economic Development Quarterly, Vietnamese Journal of Economic Development, and Vietnamese Journal of Urbanism. 

He is also the Acting Chair of Department of Real Estate Development at the School of Economics, the University of Economics – Ho Chi Minh City. He also serves as an adjunct faculty for the Loyola University Chicago’s Study Abroad Vietnam Program. He teaches urban economics, spatial econometrics, real estate development, and public economics.

In addition to teaching and research, Dr. Nguyen works with the Ho Chi Minh City’s Department of Planning and Architecture and the private sector in consulting projects on urban & regional planning, real estate, and economic development. He understands the social and environmental sustainability and can collaborate with stakeholders of development across disciplines and sectors.

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Curiosity #1

How far do infrastructural projects from foreign direct initiatives have an economics impact beyond the province or state where they are located? 

Using Vietnam as our case study,  Foreign direct investment (FDI) is not evenly distributed among regions and jurisdictions in Vietnam. While some regions and provinces succeed in attracting investment from other countries and have thrived, others failed to do so and have to depend on the central government for continuous subsidies. 

Introduction- Why is Infrastructure Important?

Amongst many different reasons, infrastructural support within provinces has emerged as an important factor in determining its capability to attract and retain businesses. The existing conditions of major infrastructure such as roadways, public utilities and telecom networks actively affects production and transportation of merchandise and delivery of services. Poorly invested and maintained infrastructure leads to the failure in luring investors from other places and retaining local ones. 

Movements in Vietnam, Expert Insight

Vietnam has actively reacted to this, with provincial governments requesting for additional funding for infrastructure projects through the central government, public-private partnerships and international financial agencies. However, our consultants have repeatedly uncovered that these plans are usually planned in isolation from province to province without tapping into neighbouring provinces’ existing infrastructure. Consequently, this is both a missed opportunity and leads to wastage of resources.

Solutions, Movements Forward

The synergistic opportunity between spatial planning and regional economic strategies should be seized in order to carry out the development and maintenance of crucial infrastructural projects.

For example, instead of building another airport, one province may invest more in connectivity to an existing airport located in another province in region in order to attract businesses. Doing so helps reduce overspending in infrastructure projects in all provinces nationwide

The effect that we are discussing here is the spillover effect, in which it is not a foreign concept to the studies within provincies. This effect, in fact can be more pronounced in certain infrastructures, depending on the provinces. Current studies in the existing literature of FDI indicate that FDI inflow into a state or province depends on the conditions of the host region and ignore the possible impacts of the factors of the other nearby states or provinces. Very few studies of FDI determinants consider the field of spatial econometrics, poorly addressing the spatial interaction among states or provinces. To accurately assess and plan for a more synergistic urban future, we should also consider the research of these effects.