THE IMPACT OF FDI ON LABOR PRODUCTIVITY: EMPIRICAL STUDY IN LOCALITIES OF VIETNAM

Abstract

FDI (Foreign Direct Investment) plays a crucial role in enhancing labor productivity by not only providing capital and technological advancements but also generating spillover effects that improve skills and knowledge. This study utilises a Panel Data Regression Model to analyse the impact of FDI on labor productivity, using data from 63 provinces in Vietnam over a 12-year period (2011-2022). The empirrical findings indicate that accumulated FDI capital positively influence overall labor productivity. The regression results also suggest that macroeconomic and social factors are important for enhancing the impact of FDI on local productivity across provinces. Based on these findings, policy recommendations are made, including the development of strategies to increase the proportion of high-quality human capital and improve the local business environment.