Economic Growth, Foreign Direct Investment, Macroeconomic Conditions and Sustainability in Malaysia

Jamal Othman, Y Jafari and T Sarmidi

Applied Econometrics and International Development, 2014, vol. 14, issue 1, 215-226

Abstract: Most studies on examining the links between economic growth and FDI inflows have relied on the conventional GDP measure which has been argued as inadequate to provide clear insights on the macro sustainability of a country. Alternatively, the Genuine Savings (GS) indicator has been proposed as one of the alternative measures to reflect whether an economy is moving on a sustainable path, albeit in the weak sustainability sense. In this paper, we estimated the impact of FDI on conventional GDP and GS growth as well as on the GDP-GS gap for Malaysia from 1974-2009. The potential nonlinearities associated with the impact of FDI are captured using a macroeconomic conditions indicator as a threshold variable. The results demonstrate stronger FDI impacts on Malaysian GDP and GS growth as well as on reducing the GDP-GS gap once the general macroeconomic conditions in the country reaches a particular level. The results may suggest that FDIs will be more impactful in accelerating future economic growth and sustainability if a country is able to maintain a particular state of macroeconomic conditions.

Keywords: Malaysian macroeconomic conditions; Sustainable development; Genuine savings; Conventional GDP; GDP- Genuine savings gap; Foreign direct investment. (search for similar items in EconPapers)
JEL-codes: F23 F36 F43 O16 Q56 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.usc.es/economet/reviews/aeid14116.pdf
No.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eaa:aeinde:v:14:y:2014:i:1_16

Ordering information: This journal article can be ordered from
http://www.usc.es/economet/info.htm

Access Statistics for this article

More articles in Applied Econometrics and International Development from Euro-American Association of Economic Development
Bibliographic data for series maintained by M. Carmen Guisan ().