Relationship of Foreign Direct Investment and Other Macro Variables in Malaysia: ARDL Approach

Abstract

Our study seeks to determine the long-term and short-term connections among various variables related to foreign direct investment such as economic growth, export value, and interest rates in Malaysia. We take data from the World Bank as a secondary source for the years 2000 to 2020, From our estimation results, we find that the variables we estimate have Economic growth and foreign direct investment at long and short run relationships, in addition to export and direct investment from abroad worth, which at the short run, the economic growth have significant positive effect on foreign direct investment. Accordingly, the value of exports has a strong beneficial impact on foreign direct investment. In contrast to the considerable inverse link between interest rates and foreign direct investment, this indicates that with increasing economic growth and the value of exports in the short term, the foreign direct investment will also increase, it is different from interest rates, whose increase in the short term will actually have an effect on decreasing malaysia welcomes foreign direct investment.