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The Impact of Foreign-direct Investment on Economic Growth in Malaysia: The Role of Financial Development

Author

Listed:
  • Ghaith Alzaidy

    (Department of Economics, University Putra Malaysia, Malaysia,)

  • Mohd Naseem Bin Niaz Ahmad

    (Department of Economics, University Putra Malaysia, Malaysia,)

  • Zakaria Lacheheb

    (Department of Economics, University Putra Malaysia, Malaysia,)

Abstract

This paper investigates the impact of foreign-direct investment (FDI) and financial development on economic growth in Malaysia over the period of 1975-2014. According to autoregressive distributed lag bound test approach to co integration analyses, the results found that financial development plays an essential role in mediating the impact of FDI on economic growth in Malaysia. This implies that well-developed financial sectors lead to further and facilitate FDI spill over and hence yield economic growth, particularly for the case of Malaysia.

Suggested Citation

  • Ghaith Alzaidy & Mohd Naseem Bin Niaz Ahmad & Zakaria Lacheheb, 2017. "The Impact of Foreign-direct Investment on Economic Growth in Malaysia: The Role of Financial Development," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 382-388.
    • Handle: RePEc:eco:journ1:2017-03-50
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    2. Zaiyang Li & Hassan Swedy Lunku & Shaohua Yang & Agus Salim, 2024. "The dynamic interplay of foreign direct investment and education expenditure on Sub-Saharan Africa income inequality," International Economics and Economic Policy, Springer, vol. 21(3), pages 593-616, July.
    3. Abdul Rehman & Hengyun Ma & Sufyan Ullah Khan & Muntasir Murshed & Muhammad Kamran Khan & Fayyaz Ahmad & Muhammad Zubair Chishti, 2023. "Do Exports of Communication Technology, Food, Manufacturing, and Foreign Investments Foster Economic Growth in Pakistan? an Exploration From Asymmetric Technique," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(4), pages 4238-4255, December.
    4. Louail Bilal & Zouita Mohamed Salah, 2021. "The relationship between foreign direct investment, financial development and growth economic in Next-11 Countries: a PMG/ARDL estimation," Management, Sciendo, vol. 25(1), pages 28-50, January.

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    More about this item

    Keywords

    Financial Development; Economic Growth; Foreign-direct Investment; PCA; Autoregressive Distributed Lag;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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