The relationship between trade openness, foreign direct investment and growth: Case of Malaysia

Baharom, A.H. and Habibullah, M.S. and Royfaizal, R. C (2008): The relationship between trade openness, foreign direct investment and growth: Case of Malaysia.

Abstract

This study examines the role of trade openness and foreign direct investment in influencing economic growth in Malaysia during 1975-2005, using the Bounds testing approach suggested by Pesaran et al. (2001). The empirical results demonstrate that trade openness is positively associated and statistically significant determinant of growth, both in short run and the long run. The result also suggested that foreign direct investment is positively associated in the short run and negatively associated in the long run, both significantly. Besides these two variables, the other control variable namely exchange rate is also significant in the short run as well as in the long run.

• Item Type: MPRA Paper
• Language: English
• Keywords: trade openness; foreign direct investment; economic growth; Malaysia
• Subjects: F - International Economics > F1 - Trade > F10 - General; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies

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