Role of Foreign Investment (FDI) and Labor Productivity: Empirical Study in Vietnamese Provinces

Abstract

The article analyzes empirically the role and impact of foreign direct investment (FDI) on labor productivity of provinces in Vietnam. Based on data of 63 provinces in the period 2010 - 2021, the research findings show 4 dimensions of FDI that have a positive impact on labor productivity including: (i) FDI amount or active accumulative implemented FDI in local economy, (ii) active accumulative registered FDI projects, (iii) employment in FDI sector, and (iv) net revenue of FDI sector. We found also 2 dimensions of FDI that do not influence significantly the labor productivity of Vietnamese provinces, including: (a) active accumulative registered FDI capital and (b) active FDI enterprises in the local economy. Based on the research results, we propose some recommendations in attracting FDI in Vietnamese provinces in order to increase their labor productivity.