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Abstract
The main objective of this study is to empirically investigate the relationship between exports, Forei gn Direct Investment (FDI) and the economic growth in Malaysia. Records of annual time series data from the year 1971 till 2013 have been utilized for this purpose. Upon testing the data for stationarity, the Auto Regres sive Distributed Lag (ARDL) model has been applied for the purpose of empirical investigation. The empirica l results indicate that the productivity factor and e xternality effect of exports on the non-export sect or are found to be statistically, positively significant, with t he exports also having a positive impact on the eco nomic growth and FDI of the country. The results support Exports Led Growth (ELG) and FDI-Led economic Growth (FLG) in Malaysia. The finding further suggests that Mala ysia should continuous pursue exports promotion and a liberal investment economic policy in order to main tain and bolster overall economic growth.
Highlights
IntroductionExports and Foreign Direct Investment (FDI) are considered as main determinants of high economic growth in Southeast Asian countries (Shawa and Yao, 2013; Eryigit, 2012)
RM16592 and RM35453 million in 1980s, 1990s, 2000s and 2010-2013 respectively, those flows were veryExports and Foreign Direct Investment (FDI) are considered as main determinants of high economic growth in Southeast Asian countries (Shawa and Yao, 2013; Eryigit, 2012)
The empirical results indicate that the productivity factor and externality effect of exports on the non-export sector are found to be statistically, positively significant, with the exports having a positive impact on the economic growth and FDI of the country
Summary
Exports and FDI are considered as main determinants of high economic growth in Southeast Asian countries (Shawa and Yao, 2013; Eryigit, 2012). The prevailing development strategies have placeddue emphasis on both export growth and in attracting high levels of FDI. With regards to the share of FDI inflow throughout the world, Malaysia has share of 0.65, 0.74 and 0.77% in the years 2010, 2011 and 2012 respectively. In Asian countries Malaysia have share of 2.29, 2.72 and 3.99% in 2010, 2011 and 2012. In ASEAN countries Malaysia faster than expected, one would expect this to be a have share of 9.89, 10.43 and 10.65% for the year 2010, consequence of exports imparting dynamism to the 2011 and 2012 in order. In statistics of FDI economy as a whole and through FDI stimulation further inflow, Malaysia ranked 3rd among South-East Asian increasing total investment in an economy or, at least, countries and 8th among Asian countries for the year not reducing it (Liangshu, 2007)
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