Policy And Non-Policy Determinants Of Foreign Direct Investment (Fdi) In Malaysia

Kogila, Pelanisamy (2008) Policy And Non-Policy Determinants Of Foreign Direct Investment (Fdi) In Malaysia. [Final Year Project Report] (Unpublished)

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Abstract

This study is conducted to investigate the relationship between the non-policy (gross domestic product, manufacturing output and export of manufactured goods) and policy determinants of Foreign Direct Investment in Malaysia by using time series data from 1970 to 2006. In this study, Augmented Dickey-Fuller (ADF) unit root test, Johansen and Juselius cointegration test and Granger Causality test are applied to examine the relationship between FDI, gross domestic product, manufacturing output and export of manufactured goods. ADF unit root test shows that all the variables are stationary at the first difference while Johansen and Juselius test reveals the existence of one cointegrating vector which representing a long run relationship between FDI, GDP, manufacturing output and export of manufactured goods. Therefore, we found out that that FDI does not Granger causes the GDP and export of manufactured goods but FDI Granger cause the manufacturing output. However, GDP, manufacturing output and export of manufactured goods are determining the FDI inflow into Malaysia. Further more, government policies also play a crucial role in attracting inflow of FDI in Malaysia

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