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FDI-Led-Growth in Malaysia: Autoregressive Distributed Lag (ARDL) Bounds Testing Approach

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  • Jerome Kueh
  • Yong Sze Wei

Abstract

This study intends to investigate the validity of the foreign direct investment, FDI-led-growth hypothesis in Malaysia in this era. Autoregressive Distributed Lag (ARDL) bounds test approach is adopted to examine the impact of FDI inflow towards growth of Malaysia based on annually data from 1980 to 2016. Empirical results indicate that FDI inflow has significant positive impact on economic growth. This implies that FDI inflow remain important tool for stimulating economic growth of Malaysia. In addition, there is a negative impact of FDI inflow on economic growth during the 1997 Asian Financial crisis and positive impact during the 2008 Global Financial crisis. In terms of policy recommendation, the policy makers should continue to develop strategies to further attract FDI that will contribute to increasing the productivity in the country.

Suggested Citation

  • Jerome Kueh & Yong Sze Wei, 2018. "FDI-Led-Growth in Malaysia: Autoregressive Distributed Lag (ARDL) Bounds Testing Approach," International Business Research, Canadian Center of Science and Education, vol. 11(11), pages 46-54, November.
    • Handle: RePEc:ibn:ibrjnl:v:11:y:2018:i:11:p:46-54
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    References listed on IDEAS

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    More about this item

    Keywords

    foreign direct investment; ARDL bound test; economic growth;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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