Transnational Corporations, Technology and Economic Development: Backward Linkages and Knowledge Transfer in South-East Asia (original) (raw)

Developing with Foreign Investment: Malaysia

The Australian Economic Review, 1995

Over the past two decades, there has been a decisive shift in trade and industty policy in developing countries (DCs) away from import substitution and towards export-orientation. A s part of this policy shift, an increasing number of DCs have become more receptive to foreign direct investment (FDI). Despite its policy relevance, the literature on the role of FDI in the export expansion of tnanufactured exports from DCs is sparse. This article attempts to fill this gap through a case study of the role of export-oriented FDI in Malaysia's rapid industrialisation. The overall conclusion of the article is that export-oriented FDI has brought significant returns to Malaysia principally because the general economic climate has been favourable f o r the internationalisation of production for a considerable period of time. * We thank David Johnson, Richard Pomfret and an anonymous referee for comments. We are also grateful to Anant Menon and Ong Hong Cheong for valuable discussions, and to Saleha Abdul Rahman and Choo Wai Meng from the Malaysian Industrial Development Authority (MIDA) for providing access to various unpublished data.

Developing Countries’ Outward Investment: Push Factors for Malaysia

Procedia - Social and Behavioral Sciences, 2014

Outward investment enables firms to enter new markets, import intermediate products at a lower cost and accessibility to foreign technology. The FDI outflows marked the strength of economies, the dynamism of transnational corporations, TNCs and growing aspiration to compete in new markets. Thus in relation to the contemporary economic development mainly globalisation and regionalism issue, in the context of Malaysia as one of the emerging developing countries, identifying the primary determinants contributed to OFDI of Malaysia is crucial for sustainable growth. This study focuses on the factors that determine Malaysia's OFDI using Dunning's Push Factors theory. Multiple regression analysis is performed on time series data beginning from 1981 to 2011. The study finds that GDP, level of IFDI (inward FDI) stocks, productivity level, exchange rate, export level and patent, a new variable added in the study of Malaysia, are the major pushing factors of Malaysia's OFDI.

Outward foreign direct investment from Malaysia: an exploratory study

Journal of Current Southeast Asian Affairs, 2007

Although Malaysia is well known as a host economy, there is little research on its investment abroad even though this has been steadily increasing over time. Using a case study approach based on Dunning's OLI framework, seven firms are studied in order to understand their motivations to invest abroad as well as home and host country policies that have facilitated or hindered their investments. The main motivations for these firms to invest abroad are quite varied, ranging from the low labor cost advantage in the host country, saturation of the domestic Malaysian market, as well as the need to enhance their export-competitiveness in third-country markets and to exploit the domestic market potential in other countries. The main home country policy that has benefited the companies in their overseas investment is the full tax exemption on income earned overseas.

Host Country-Specific Factors Causing Outwards Foreign Direct Investment from Malaysia

Jurnal ekonomi Malaysia, 2016

This study analyzes macroeconomic and institutional factors of the host countries in attracting outwards foreign direct investment (OFDI) from Malaysia. Results show that primary motives behind Malaysian OFDI are to seek growing markets and natural resources. Foreign economy's depreciating currency with respect to Ringgit Malaysia, lower private sector lending rate, shorter geographical distance from Malaysia and government accountability are also important pull factors. Malaysian OFDI is significantly low in ASEAN Member States (AMS) and in the developed states. Policy implications thus include generation of higher OFDI towards AMS given the strategic importance of ASEAN Economic Community and in developed regions to access foreign technology.

Foreign Direct lnvestment in Malaysia: Trends and Prospects

This paper reports on a study analyzing recent trends, pattern and prospects of the foreign direct investment (FDI) in Malaysia in the post-1997 financial crisis period. Among the ASEAN-4 countries, Malaysia continues to remain as the main centre for attracting FDI. The macroeconomic variables such as GDP, exports and employment are found to be positively influenced by the growth of FDI in Malaysia.To enhance the positive effect of FDI on the growth process of the Malaysian economy the flow of FDI into export-oriented sector and use of domestic inputs by the foreign-oriented firms need to be encouraged. It is suggested that for sustained flow of FDI, continual price stability, macroeconomic balances, good governance and economic liberalization reforms are crucially important in the country. In the event of declining inflows of FDI, Malaysia has to shift towards inward looking policies and search other alternatives to sustain its growth and economic prosperity by seeking more investment ouf flows as a global player.

Foreign Direct Investment Determinants in Malaysia

British Journal of Business Design & Education, 2018

Foreign Direct Investment plays an important role in boosting up a country's economic growth and its development. Nowadays, developing countries depend on FDI largely to improve their economic performance. To put it into perspective, many developing countries are facing a shortage in capital in the progress of development. Statistically FDI is behind the huge growth of the Malaysian economy. FDI does not only create an expansion of capital, but it transfers the technology and skills to developing countries. The fluctuation of FDI inflows in Malaysia from 1995 to 2014 which it is significantly affecting the economy of the country. For this reason, researchers have conducted an examination on the factors that impact FDI inflows in Malaysia by employing annual time series data from 1985 to 2014. For testing the data, multiple linear regression has been used to determine the relationship between FDI inflows in Malaysia and independent variables (education, market size, exchange rate, inflation rate and infrastructure). Researchers have found in this study that education, market size, inflation rate and exchange rate are significantly affecting FDI inflow in Malaysia and infrastructure is the only variable that is found to be insignificant toward Malaysia's FDI inflow.

Foreign Direct Investment (FDI) in Malaysia

Advance Knowledge for Executives, 2024

Objective: Foreign Direct Investment (FDI) plays a pivotal role in propelling the Malaysian economy forward, particularly within the realm of international business. This study explains the adoption of foreign direct investment (FDI) as Malaysia's competitive advantage. Methods: This study employed a qualitative review study and utilized content analysis for data analysis. The papers were selected by purposive sampling based on reliable sources from Google Scholar, Web of Science, and Scopus databases in 2014-2024. Results: A growing rivalry exists to draw foreign direct investment (FDI) globally. This competition is driven by the potential benefits of FDI on the host country's economy, including changes in market structures, employment opportunities, and technological knowledge transfers. Additionally, FDI can help firms gain a competitive edge, increasing investor returns. It is very interested in the role of foreign direct investment (FDI) in economic growth for decades, as academics and politicians have generally recognized the benefits of this investment. Foreign direct investment is one of the main forces influencing Malaysia's economic growth. The Investment Incentives Act of 1968 and special economic zones established by the Malaysian government since the 1970s, along with a stable financial system, macroeconomic conditions, and economic expansion, have all made Malaysia an appealing destination for foreign direct investment. Conclusion and Recommendation for Future Studies: The paper provides the essentials of FDI for developing an inclusive future investigation. This approach can be considered to achieve a more comprehensive understanding of the subject matter of FDI. However, qualitative interviews and questionnaires are recommended for further studies.

Outward FDI from Southeast Asia: The Malaysian Experience

New Dimensions of Economic Globalization, 2008

This paper analyses the trends, patterns and determinants of outward foreign direct investment (OFDI) by Malaysian companies. It shows that Malaysian OFDI had taken a quantum leap since 1993 and the number of Malaysian TNCs investing abroad since the 1990s has increased significantly. The OFDI is focused mainly in services (finance, banking, insurance and tourism) and natural resources (oil and gas) with manufacturing a distant third. This also includes the emergence of offshore financial centres and developed countries as the most important host region for trans-border activity although investments in developing countries especially within ASEAN have shown tremendous growth. The key drivers of OFDI have been to increase efficiency, to access resources and to access markets.