Citation

Shu, Qing Chew (2024) Determinants of foreign direct investment in Malaysia. Issues and Perspectives in Business and Social Sciences (2). pp. 115-142. ISSN 2785-9266

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Abstract

By using annual time series data spanning 1995 to 2021, this study examines the key factors that influence foreign direct investment (FDI)inflows to Malaysia. This study employed the conventional determinants of FDI and incorporated an under-studied corruption variable to capture the political impact on FDI inflows to Malaysia. The ARDL bounds test results identified short-and long-run positive relationships between FDI inflowsand two tested variables: market size and education. Apositive long-run relationship was also found between inflation rates and FDI inflows. By contrast,infrastructure facilities werefound to be negatively related toFDI inflows in the long run. More importantly, the results ascertained that higher corruption levels hamper FDI inflows to Malaysia in the long term. Moreover, the Granger causality test revealed that market size, inflation rate, and infrastructure facilities are critical causal factors that explain the fluctuations in FDI inflows to Malaysia. In light of the results obtained, some policy recommendations are highlighted to help enhance the attractiveness of FDI, thereby stimulating economic growth in Malaysia.

Item Type:	Article
Uncontrolled Keywords:	Investment
Subjects:	H Social Sciences > HG Finance > HG4501-6051 Investment, capital formation, speculation > HG4530 Investment companies. Investment trusts. Mutual funds
Depositing User:	Ms Rosnani Abd Wahab
Date Deposited:	10 Jul 2025 08:12
Last Modified:	10 Jul 2025 08:12
URII:	http://shdl.mmu.edu.my/id/eprint/14218

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