Journal
JOURNAL OF POLICY MODELING
Volume 30, Issue 1, Pages 185-189Publisher
ELSEVIER SCIENCE INC
DOI: 10.1016/j.jpolmod.2007.06.014
Keywords
foreign direct investment; Malaysia
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Using annual time series data for the period 1960-2005, this paper examines the determinants of FDI for Malaysia to inform analytical and policy debates. Consistent with the prediction of the market size hypothesis, real GDP is found to have a significant positive impact on FDI inflows. There is evidence that growth rate of GDP exerts a small positive impact on inward FDI. From a policy point of view, the results suggest that increases in the level of financial development, infrastructure development, and trade openness promote FDI. On the other hand, higher statutory corporate tax rate and appreciation of the real exchange rate appear to discourage FDI inflows. Interestingly, the results also seem to suggest that higher macroeconomic uncertainty induces more FDI inflows. (C) 2007 Society for Policy Modeling. Published by Elsevier Inc. All rights reserved.
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