Foreign Direct Investment and Economic Growth: Cointegration Techniques

Idris Jajri

The IUP Journal of Managerial Economics, 2009, vol. VII, issue 3-4, 7-18

Abstract: Foreign Direct Investment (FDI) has been considered as one of the major factors underlying the economic growth experienced by many developing countries. In Malaysia, FDI has played an important role not only in stimulating economic growth, but has also contributed significantly to the growth of the industrial sector and the transformation of the Malaysian economic structure from agricultural to a major producer and exporter of manufactured goods. However, the race for FDI has become increasingly competitive, especially in view of the emergence of China as a new destination for FDI. This paper examines the influence of FDI on the growth of Malaysia for the period 1970-2003. It is found that FDI has significant influence on the growth rate of the Malaysian economy. In addition, multiple regression analyses are performed to determine the relationship between the specific determinants and FDI inflow to the country. The results of the FDI determinants model, firstly, reveal the existence of a long-run relationship between FDI and the variables involved; and secondly, that GDP, exchange rate, public development expenditure, openness of the economy and labor cost have a direct impact on FDI.

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (4)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:icf:icfjme:v:07:y:2009:i:3-4:p:7-18

Access Statistics for this article

More articles in The IUP Journal of Managerial Economics from IUP Publications
Bibliographic data for series maintained by G R K Murty ().