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The Impact of Foreign Direct Investment (FDI) On Economic Growth in
Malaysia.
Noor Hazleeniza Hasnin binti Zainol Abidin
Supervisor: Encik Muhammad Najit Bin Sukemi
Bachelor of Economics (Natural Resources)
School of Social Development and Economics
Foreign direct investment (FDI) is one of the important external sources of finance for
developing countries such as Malaysia. The inclusion of the FDI is expected to be
influenced by the inclusion of capital resources and transfer of technology. This study
was conducted to find the relationship between foreign direct investment and economic
growth in Malaysia. Time series data of FDI, economic growth, interest rates, exchange
rates, economic openness and exports for 30 years from 1987 to 2016 were used and
analyzed using the Vector Errors Model (VECM). There are two results that have been
obtained. First, there is a significant relationship between FDI and economic growth.
Secondly, there is a short-term and long-term relationship between PLA and economic
growth. Overall, this study has proven the role of PLA in assisting economic growth
directly or indirectly.
1490 | UMT UNDERGRADUATE RESEARCH DAY 2018