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FDI
Department of Economics
Faculty of Economics and Business
University Malaysia Sarawak (UNIMAS)
94300, Kota - Samarahan, Sarawak, Malaysia
unimas.my
The Determinants of Foreign Direct Investment in Malaysia
Department of Economics, Faculty of Economics and Business, University Malaysia Sarawak.
Summary,
This study investigates the role of exchange rate, market size and Infrastructure for attracting foreign direct investment (FDI). In this regard, 42 years of time series data on annual basis has been collected for the period 1974–2015. ADF, DF-GLS and KPSS unit root tests are utilized to determine the stationary of the variables. It shows all the variables are non-stationary at level but stationary at first difference {first level stationary, e.g. I(1)}.
Next, Johansen co-integration testing approach was applied as all the variables in the model are first level stationary, e.g. I(1). VECM Grenger causality applied to identify the short run relation. The empirical findings of this study confirm there is no short run relationship between the variables but found the long run relationship among the variables.
However, Market size and exchange rate have strong positive and significant impact on long-run for attracting FDI in this regard. The coefficient ECM is negative and significant, which means that it converges towards long run equilibrium. For achieving higher economic growth and economies of scale, the country should concentrate on the ingredients of this study so that it could attract more FDI as compared to the other countries. Variance Decomposition confirms that most exogenous variable as Exchange rate and most endogenous variable is Market size and Generalize Impulse Response Function (GIRFs) result shows the majority of the variables are rather lethargic and able to settle after 7 years time.
© 2016 UNIMAS. All right reserved.
Keywords: Exchange Rate, Market Size, Infrastructure, FDI, VECM, Variance Decomposition, GIRF, Malaysia.
JEL Classification: F21, F31, C1.
© Mohammad Hasan Tusher
Founder and CEO at GMGP Int.
Researcher (International Economics)
See the full paper on my LinkedIn Profile. LinkedIn @mohammadhasantusher
Facebook @MohammadHassanTusher
ResearchGate @Mohammad_Hasan_Tusher
Faculty of Economics and Business
University Malaysia Sarawak (UNIMAS)
94300, Kota - Samarahan, Sarawak, Malaysia
unimas.my
The Determinants of Foreign Direct Investment in Malaysia
Department of Economics, Faculty of Economics and Business, University Malaysia Sarawak.
Summary,
This study investigates the role of exchange rate, market size and Infrastructure for attracting foreign direct investment (FDI). In this regard, 42 years of time series data on annual basis has been collected for the period 1974–2015. ADF, DF-GLS and KPSS unit root tests are utilized to determine the stationary of the variables. It shows all the variables are non-stationary at level but stationary at first difference {first level stationary, e.g. I(1)}.
Next, Johansen co-integration testing approach was applied as all the variables in the model are first level stationary, e.g. I(1). VECM Grenger causality applied to identify the short run relation. The empirical findings of this study confirm there is no short run relationship between the variables but found the long run relationship among the variables.
However, Market size and exchange rate have strong positive and significant impact on long-run for attracting FDI in this regard. The coefficient ECM is negative and significant, which means that it converges towards long run equilibrium. For achieving higher economic growth and economies of scale, the country should concentrate on the ingredients of this study so that it could attract more FDI as compared to the other countries. Variance Decomposition confirms that most exogenous variable as Exchange rate and most endogenous variable is Market size and Generalize Impulse Response Function (GIRFs) result shows the majority of the variables are rather lethargic and able to settle after 7 years time.
© 2016 UNIMAS. All right reserved.
Keywords: Exchange Rate, Market Size, Infrastructure, FDI, VECM, Variance Decomposition, GIRF, Malaysia.
JEL Classification: F21, F31, C1.
© Mohammad Hasan Tusher
Founder and CEO at GMGP Int.
Researcher (International Economics)
See the full paper on my LinkedIn Profile. LinkedIn @mohammadhasantusher
Facebook @MohammadHassanTusher
ResearchGate @Mohammad_Hasan_Tusher
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