 Before the Storm: The Impact of Foreign Capital Inflows on the Malaysian Economy, 1966–1996Wong Kiong and K. Jomo Journal of the Asia Pacific Economy, 2005, vol. 10, issue 1, 56-69 Abstract: Foreign capital inflows (FCI) are supposed to bring positive effects by augmenting investible funds, domestic savings and foreign exchange earnings, thus closing the savings and foreign exchange gaps. FCI may also have undesirable effects on the domestic savings rate as well as on the recipient's balance of payments position. This study examines both sets of influences on Malaysia between 1966 and 1996, i.e. before the 1997–98 crisis. Historically, Malaysia has relied heavily on foreign capital, especially foreign direct investment, rather than long-term borrowings. While FCI augmented domestic investment funds to accelerate the growth rate, they had negative influences on the savings rate as well as on the balance of payments. The findings also suggest that domestically raised funds, from savings and self-generated export earnings, are better than external funding. Hence, to sustain economic growth, greater efforts should be directed to better mobilising domestic savings, rather than relying heavily on foreign capital. Date: 2005 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:rjapxx:v:10:y:2005:i:1:p:56-69 Ordering information: This journal article can be ordered from DOI: 10.1080/1354786042000309071 Access Statistics for this article Journal of the Asia Pacific Economy is currently edited by Leong Liew More articles in Journal of the Asia Pacific Economy from Taylor & Francis Journals |
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