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The relationship between trade openness, foreign direct investment and growth: Case of Malaysia

A.H. Baharom, Muzafar Shah Habibullah () and R. C. Royfaizal
Authors registered in the RePEc Author Service: Baharom Abdul Hamid ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study examines the role of trade openness and foreign direct investment in influencing economic growth in Malaysia during 1975-2005, using the Bounds testing approach suggested by Pesaran et al. (2001). The empirical results demonstrate that trade openness is positively associated and statistically significant determinant of growth, both in short run and the long run. The result also suggested that foreign direct investment is positively associated in the short run and negatively associated in the long run, both significantly. Besides these two variables, the other control variable namely exchange rate is also significant in the short run as well as in the long run.

Keywords: trade openness; foreign direct investment; economic growth; Malaysia (search for similar items in EconPapers)
JEL-codes: F10 F43 (search for similar items in EconPapers)
Date: 2008-10-17
New Economics Papers: this item is included in nep-fdg, nep-int, nep-opm and nep-sea
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