Developing with Foreign Investment: Malaysia (original) (raw)
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2012
Developing and transition economies are an increasingly important source of outward foreign direct investment (OFDI). The objective of this paper is to fill the gap in the literature regarding outward foreign direct investment by adopting the well known gravity model to examine the relationship between trade (export and import), inward and outward FDI using Malaysia as a case. This contributes to the literature as previous studies on OFDI in Malaysia have focused primarily on the determinants of these outward flows, and there are no studies examining the impact of OFDI on trade. Our findings reveal that inward foreign direct investment (IFDI) conforms to the observed pattern of a complementary relationship between FDI and trade while OFDI and trade linkages are not significant. The empirical results also
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.
Causal Links between Foreign Direct Investment and Exports: Evidence from Malaysia
International Journal of …, 2009
Malaysia has encouraged foreign investment not only for its role in technology transfer but also for its contribution to Malaysian exports. Therefore, the aim of this study is to investigate empirically the causal relationship between FDI inflows and exports in Malaysia. The methodologies of stationarity of time series and the multivariate Granger concept of causality were employed to carry out the investigation. The finding that time series variables are cointegrated implies that there is a long term relationship between them. The results appear to support the effectiveness of the outward looking orientation policy deployed in this country.
Does Outward FDI Matter in International Trade? Evidence from Malaysia
2012
Developing and transition economies are an increasingly important source of outward foreign direct investment (OFDI). The objective of this paper is to fill the gap in the literature regarding outward foreign direct investment by adopting the well known gravity model to examine the relationship between trade (export and import), inward and outward FDI using Malaysia as a case. This contributes to the literature as previous studies on OFDI in Malaysia have focused primarily on the determinants of these outward flows, and there are no studies examining the impact of OFDI on trade. Our findings reveal that inward foreign direct investment (IFDI) conforms to the observed pattern of a complementary relationship between FDI and trade while OFDI and trade linkages are not significant. The empirical results also
A re-examination of the role of foreign direct investment and exports in Malaysia's economic growth
2008
The main objective of this study was to reexamine the role of foreign direct investment (FDI) and exports in Malaysia's economic growth over the period of 1970 to 2006. The Johansen and Juselius (1990) cointegration test was used to investigate the presence of a long-run equilibrium relationship between economic growth and its determinants. Besides, the vector errorcorrection model (VECM) and the Granger (1969) causality test were used to examine the short-and long-run causality direction between the relevant variables. The empirical results revealed that economic growth and its determinants were cointegrated. The Dynamic OLS results suggested that FDI and exports were positively related to economic growth. In addition, the Granger causality results strongly supported bilateral causality between economic growth and its determinants. This indicated that FDI and exports contribute to Malaysia's economic growth. In fact, high economic growth will also cause FDI and export-orientated industries to grow rapidly.
Malaysia's outward FDI: The effects of market size and government policy
Journal of Policy Modeling, 2011
This paper extends the empirical literature of Malaysia's outward FDI (OFDI) by considering the impact of foreign market size and home international reserves using multivariate cointegration and error-correction modeling techniques. The empirical results reveal that there is a positive long-run relationship between Malaysia's OFDI and its key determinants, viz. foreign market size, real effective exchange rate, international reserves and trade openness. The main findings suggest that apart from the market-seeking incentive and the adoption of outward-oriented policies, the Malaysian government could also encourage OFDI by implementing liberal policy on capital outflows. On the basis of these findings, we draw some policy implications for the country's economic development and the internationalization of Malaysian firms in the era of globalization.
Markets vs. Government. Foreign Direct Investment and Industrialization in Malaysia
2011
This paper examines the changing role of government and foreign firms in Malaysia’s industrialization process. Economists have held different views on the role of government in industrialization. Some believed that the developing world was full of market failures and the only way in which poor countries could escape from their poverty traps was through the forceful intervention. Others opposed to