A panel data analysis of labour productivity determinants in Vietnam’s textile and garment industry

Purpose This study aims to examine the determinants of labour productivity in Vietnam’s textile and garment industry, with an emphasis on firm-level characteristics and the institutional environment influencing productivity performance. Design/methodology/approach An unbalanced panel data set of Vietnamese textile and garment enterprises covering the period 2017–2023 is used. The analysis is based on a Cobb–Douglas production framework and uses panel regression techniques, including fixed effects estimation, to capture productivity dynamics while controlling for unobserved firm heterogeneity. Findings The results indicate that capital intensity and labour quality have a positive and statistically significant impact on labour productivity. In contrast, firm size, measured by labour scale, exhibits a negative effect, suggesting co-ordination inefficiencies in labour-intensive production. Market share and provincial institutional quality are found to enhance productivity, whereas excessive financial leverage constrains firm performance. Practical implications Productivity improvement in the textile and garment industry should prioritise workforce skill upgrading, managerial capacity building and improvements in the local business environment rather than labour expansion alone. Originality/value This study provides new firm-level panel evidence on productivity determinants in a labour-intensive textile and garment industry in a developing economy, highlighting the joint role of firm characteristics and institutional quality.