An Analytical Framework for Assessing the Influence of Foreign Direct Investment Inflows on Labour Productivity
Abstract
The food processing industry in Vietnam represents a critical pillar of economic development, export competitiveness, and Foreign direct investment (FDI) is an important mechanism through which economies may acquire capital, advanced technologies, managerial expertise, and access to international production networks. However, increased FDI inflows do not automatically translate into higher labour productivity, as the outcomes depend on institutional quality, domestic firms’ absorptive capacity, technological diffusion, workforce capabilities, and the structure of investment. This article develops an analytical framework for assessing the relationship between FDI inflows and labour productivity by integrating endogenous growth theory, productivity spillover mechanisms, institutional conditions, and dynamic econometric analysis. Drawing on the supplied literature, the study proposes a conceptual and methodological approach that distinguishes direct productivity gains from indirect spillovers and identifies the conditions under which FDI may produce sustained improvements in productive capacity. The framework combines labour productivity indicators, FDI measures, institutional variables, and relevant macroeconomic controls within a dynamic analytical structure. It also outlines an empirical strategy based on autoregressive distributed lag modelling and bounds testing to distinguish short-run adjustments from long-run relationships. The synthesis indicates that the productivity effects of FDI should be evaluated conditionally rather than assumed to be uniformly positive. The framework provides a basis for comparative research and evidence-informed investment policy, while recognizing that the proposed relationships require empirical validation using country-specific or panel data.
Keywords
References
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