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Comparative Analysis of the Factors Affecting the Entry of FDI to Malaysia and Some ASEAN Selected Countries

Muhammad Azril Bin Mohd Pauzi
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Muhammad Azril Bin Mohd Pauzi: National University of Malaysia

Abstract of Economic, Finance and Management Outlook, 2016, vol. 6, 10

Abstract: In the era of globalization, international trade becomes common trending. Every nation in the world and every multinational company try their best to be an outstanding entity to show the best intelligence and their effectiveness in controlling and expanding their market size. FDI came as the biggest factor to look about before making any trade policies. This is because FDI can bring the capital, technology, business opportunity and increase domestic employment. The objective of the study is to analyse the connection between FDI and other factors that can influence to increase inward FDI, such as real effective exchange rate, openness, GDP growth, and employment in the long term and short term relationship. And what trigger the increase in inward FDI. This studies using PMG method and data panel for the five countries. The countries is Malaysia, Singapore, Indonesia, Thailand, and Philippine. The annual data set period is from the year 1984 until 2014. PMG method is chosen because it’s must involve pooling and averaging. It’s allows the cross-section point, heterogeneous dynamics in the short term. Error variance to be difference and free across the group but coefficient in the long term is expected to be the same. Homogeneous in long run. In summary, we find that there is existed the long run positive relationship between FDI and trade openness. And also growth of GDP also significant and positive. This study is important to show the connection between factors in determining of FDI and its influence of selected countries under this study. The policies must relevant with trade openness and protect domestic industries and contribute to GDP growth.

Date: 2016
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