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The effect of foreign direct investment on labour productivity: Evidence from five investor countries in the Malaysian manufacturing industries

This study has utilised the Seemingly Unrelated Regression (SUR) estimator method to explore the spillover effects of “technology” and “knowledge” from foreign direct investment (FDI) on Malaysian labour productivity. The study focus was on Malaysian medium-low technology and low-technology industri...

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Main Authors: Mohamad Yunus, Norhanishah, Abdullah, Norehan
Format: Article
Language:English
Published: UUM Press 2022
Subjects:
HD Industries. Land use. Labor
Online Access:https://repo.uum.edu.my/id/eprint/28984/1/MMJ%2026%202022%2055-86.pdf
https://doi.org/10.32890/mmj2022.26.3
https://repo.uum.edu.my/id/eprint/28984/
https://e-journal.uum.edu.my/index.php/mmj/article/view/14975
https://doi.org/10.32890/mmj2022.26.3
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id my.uum.repo.28984
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spelling my.uum.repo.289842023-02-09T03:22:04Z https://repo.uum.edu.my/id/eprint/28984/ The effect of foreign direct investment on labour productivity: Evidence from five investor countries in the Malaysian manufacturing industries Mohamad Yunus, Norhanishah Abdullah, Norehan HD Industries. Land use. Labor This study has utilised the Seemingly Unrelated Regression (SUR) estimator method to explore the spillover effects of “technology” and “knowledge” from foreign direct investment (FDI) on Malaysian labour productivity. The study focus was on Malaysian medium-low technology and low-technology industries from 2000 to 2018. The findings showed that the presence of FDI spillovers as diffusion channels that increased labour productivity were greater through “technology effects” compared to “learning effects” for both types of industries. A cross-comparison of the results on technological spillovers between investor countries revealed that Singaporean and Japanese multinational corporations (MNCs) contributed the most significant technological effects in increasing Malaysian labour productivity, with the effects being most noticeable was in low-technology industries. These findings seem to suggest that the spillover effects of FDI are still concentrated in sectors with low-capacity technologies that commensurate with the required level of workforce capability. The negative relationship between “knowledge” spillovers and productivity found in this study seems to illustrate that the absorptive capacity of local workers to absorb high-skill-based technology from MNCs is still at a low level in both types of industries. This study has recommended that strategies and mechanisms should be devised accordingly to assist MNCs in their effort to improve knowledge and technology transfers, while simultaneously acknowledging the constraints of human factors, absorptive capacity, competition for resources or ethical dilemmas and cultural barriers. UUM Press 2022 Article PeerReviewed application/pdf en cc4_by https://repo.uum.edu.my/id/eprint/28984/1/MMJ%2026%202022%2055-86.pdf Mohamad Yunus, Norhanishah and Abdullah, Norehan (2022) The effect of foreign direct investment on labour productivity: Evidence from five investor countries in the Malaysian manufacturing industries. Malaysian Management Journal, 26. pp. 55-86. ISSN 0128-6226 https://e-journal.uum.edu.my/index.php/mmj/article/view/14975 https://doi.org/10.32890/mmj2022.26.3 https://doi.org/10.32890/mmj2022.26.3
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutional Repository
url_provider http://repo.uum.edu.my/
language English
topic HD Industries. Land use. Labor
spellingShingle HD Industries. Land use. Labor
Mohamad Yunus, Norhanishah
Abdullah, Norehan
The effect of foreign direct investment on labour productivity: Evidence from five investor countries in the Malaysian manufacturing industries
description This study has utilised the Seemingly Unrelated Regression (SUR) estimator method to explore the spillover effects of “technology” and “knowledge” from foreign direct investment (FDI) on Malaysian labour productivity. The study focus was on Malaysian medium-low technology and low-technology industries from 2000 to 2018. The findings showed that the presence of FDI spillovers as diffusion channels that increased labour productivity were greater through “technology effects” compared to “learning effects” for both types of industries. A cross-comparison of the results on technological spillovers between investor countries revealed that Singaporean and Japanese multinational corporations (MNCs) contributed the most significant technological effects in increasing Malaysian labour productivity, with the effects being most noticeable was in low-technology industries. These findings seem to suggest that the spillover effects of FDI are still concentrated in sectors with low-capacity technologies that commensurate with the required level of workforce capability. The negative relationship between “knowledge” spillovers and productivity found in this study seems to illustrate that the absorptive capacity of local workers to absorb high-skill-based technology from MNCs is still at a low level in both types of industries. This study has recommended that strategies and mechanisms should be devised accordingly to assist MNCs in their effort to improve knowledge and technology transfers, while simultaneously acknowledging the constraints of human factors, absorptive capacity, competition for resources or ethical dilemmas and cultural barriers.
format Article
author Mohamad Yunus, Norhanishah
Abdullah, Norehan
author_facet Mohamad Yunus, Norhanishah
Abdullah, Norehan
author_sort Mohamad Yunus, Norhanishah
title The effect of foreign direct investment on labour productivity: Evidence from five investor countries in the Malaysian manufacturing industries
title_short The effect of foreign direct investment on labour productivity: Evidence from five investor countries in the Malaysian manufacturing industries
title_full The effect of foreign direct investment on labour productivity: Evidence from five investor countries in the Malaysian manufacturing industries
title_fullStr The effect of foreign direct investment on labour productivity: Evidence from five investor countries in the Malaysian manufacturing industries
title_full_unstemmed The effect of foreign direct investment on labour productivity: Evidence from five investor countries in the Malaysian manufacturing industries
title_sort effect of foreign direct investment on labour productivity: evidence from five investor countries in the malaysian manufacturing industries
publisher UUM Press
publishDate 2022
url https://repo.uum.edu.my/id/eprint/28984/1/MMJ%2026%202022%2055-86.pdf
https://doi.org/10.32890/mmj2022.26.3
https://repo.uum.edu.my/id/eprint/28984/
https://e-journal.uum.edu.my/index.php/mmj/article/view/14975
https://doi.org/10.32890/mmj2022.26.3
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score 13.211869

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