The Determinants of Foreign Direct Investment and Labor Productivity in the Manufacturing Industry of Vietnam - The Firm-Level Data Evidence

Foreign direct investment (FDI) has become an essential source for the economic growth and development of many developing countries. FDI can deliver financial capital, a strategic way to access the global market, a channel to transfer technology and skills to the host country. Many developing countries pay attention to attracting FDI as an important issue. The first objective of this study is to investigate the determinants of FDI in the manufacturing industry in Vietnam by finding out the differences in characteristics between FDI and local enterprises and then examining the business climate factors which affect the operations of foreign-invested firms. Finding the importance of export and formal training to the labor productivity of the enterprise is the second objective. And the third objective of this study is to investigate the difference in investors’ perspectives on the business climate after nine years of change and development by conducting a novel pilot study with foreign companies in Vietnam’s manufacturing industry.