Empirical Analysis of the Relationships between inward FDI and Business Cycles in Malaysia

Manal Omer and Liu Yao

Modern Applied Science, 2011, vol. 5, issue 3, 157

Abstract: Globalization has been spreading macro economic effects around the world as well as fueling firms’ cross-national activities. Are there any links between these two influences? This paper chose Malaysia as subject and examined the causal relationships between inward foreign direct investment (FDI) and business cycles. A set of models based on Granger Causality test and VAR Impulse Responses were constructed. Time-series data covered from 1970 to 2008. And the findings clearly indicated that in the case of Malaysia, there is evidence of bi-directional causality and long-run relationships between firms’ (foreign) activities (inward FDI) and business cycle developments in a long term.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:ibn:masjnl:v:5:y:2011:i:3:p:157

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