Does foreign investment enhance domestic manufacturing firms' labour productivity? Evidence from a quantile regression approach

We provide new insights into the relationship between foreign investment and the labour productivity of domestic firms in the Vietnamese manufacturing industry. Using quantile regression analysis of a panel of firm-level data over a 2010-2015 study period, we find that the presence of foreign investment has a positive impact on domestic firm labour productivity through competition effects within the industry at the middle and high quantiles. We do not find significant evidence to support a positive relationship between foreign investment in downstream sectors and domestic firm labour productivity in upstream sectors, however. There are some indications that suggest a positive relationship between foreign suppliers in upstream sectors and labour productivity of domestic buyers in downstream sectors at the low and middle quantiles.