Karimi, Mohammad Sharif and Yusop, Zulkornain (2009): FDI and Economic Growth in Malaysia. Forthcoming in: Asian-African Journal of Economics and Econometrics
Download (209kB) | Preview
Abstract: This study examines the causal relationship between foreign direct investment and economic growth. Methodology is based on the Toda-Yamamoto test for causality relationship and the bounds testing (ARDL). Time-series data covering the period 1970-2005 for Malaysia, the study found, in the case of Malaysia there is no strong evidence of a bi-directional causality and long-run relationship between FDI and economic growth. This suggests that FDI has indirect effect on economic growth in Malaysia
|Item Type:||MPRA Paper|
|Original Title:||FDI and Economic Growth in Malaysia|
|Keywords:||Foreign direct investment, Toda-Yamamoto test, bounds testing (ARDL), economic growth. Malaysia|
|Subjects:||C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models
O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General
F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade
F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements
F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies
|Depositing User:||Mohammad Sharif Karimi|
|Date Deposited:||04. May 2009 00:45|
|Last Modified:||23. Sep 2015 12:33|
Addison, T. and A. Heshmati (2003), “The New Global Determinants of FDI Flows to Developing Countries: The Importance of ICT and Democratization,” WIDER Discussion Paper No.2003/45, Helsinki: UNU-WIDER.
Asiedu, E. (2002), “On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?,” World Development, 30 (1): 107-19.
Balasubramanyam, V. N., M. Salisu, and D. Sapsford (1996), “Foreign Direct Investment and Growth in EP and IS Countries,” Economic Journal, 106: 92-105.
Balasubramanyam, V. N., M. Salisu, and D. Sapsford (1999), “Foreign Direct Investment as an Engine of Growth,” Journal of International Trade and Economic Development, 8: 27-40.
Bera, A., and C. Jarque (1981), “An Efficient Large Sample Test for Normality of Observations and Regression Residuals,” ANU Working Papers in Econometrics, 40. Canberra: Australian National University.
Blomstrom, M , and A. Kokko (1998), “Multinational Corporations and Spillovers,” Journal of Economic Surveys, 12: 247-77.
Blough, S. (1992), “The Relationship between Power and Level for Generic Unit Root Tests in Finite Samples,” Journal of Applied Econometrics, 7 (3): 295-308.
Borensztein, E., J. de Gregorio, and J.-W. Lee (1998), “How Does Foreign Investment Affect Economic Growth?,” Journal of International Economics, 45: 115-35.
Brems, H.(1970), “A Growth Model of International Direct Investment,” American Economic Review 60:3, 320-331.
Carkovic, M, and R. Levine (2003), “Does Foreign Direct Investment Accelerate Economic Growth?,” Working Paper. Minneapolis: University of Minnesota.
Chakrabarti, A. (2001), “The Determinants of Foreign Direct Investment: Sensitivity Analysis of Cross-Country Regressions,” KYKLOS, 54 (1): 89-114.
Chakraborty, C, and Basu, P. (2002), “Foreign direct investment and growth in India: A cointegration approach,” Applied Economics, 34(9), 1061–1073.
Choe, J. I. (2003), “Do foreign direct investment and gross domestic investment promote economic growth?,” Review of Development Economics, 7(1), 44–57.
Chowdhury ,A. Mavrotas,G.(2005), “FDI and Growth: A Causal Relationship,” WIDER .Research Paper.
De Mello, L. (1997), “Foreign Direct Investment in Developing Countries and Growth: A Selective Survey,” Journal of Development Studies, 34 (1): 1-34.
De Mello, L. (1999), “Foreign Direct Investment Led Growth: Evidence from Time Series and Panel Data,” Oxford Economic Papers, 51, 133-151.
De Mello, L.R., Jr. (1997), “Foreign Direct Investment in Developing Countries and Growth: A Selective Survey,” The Journal of Development Studies 34:1 , 124.
Dolado, J.J. and H. Lutkepokl (1996), “Making Wald Tests Work for Cointegrated VAR Systems,” Econometric Review, 15, 369-86.
Duasa,J.(2007), “Malaysian Foreign Direct Investment and Growth:Does Stability Matter?,” The journal of Economic Cooperation, 28,2(2007):83-98.
Ericsson, J. and Irandoust, M. (2001), “On the Causality between Foreign Direct Investment and Output: a Comparative Study,” The International Trade Journal, Vol. 15, pp. 122-132.
Gorg, H. and D. Greenaway (2004), “Much Ado about Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?,” World Bank Research Observer, 19: 171-97.
Gujarati, D. (2003), Basic Econometrics. 14th Edition, McGraw-Hill, New York.
Greene, W. (1997), Econometric Analysis. London: Prentice Hall.
Giles, D. (1997), “Causality Between the Measured and Underground Economies in New Zealand,” Applied Economics Letters, 4 (1): 63-7.
Harris, R. (1995), “Using Cointegration Analysis in Econometric Modelling,” Englewood Cliffs, NJ: Prentice Hall/Harvester Wheatsheaf.
Harrison, A. (1994), “The Role of Multinationals in Economic Development,” The Columbia Journal of World Business, 29 (4).
Hsiao, C., & Shen, Y. (2003), “Foreign Direct Investment and Economic Growth: The Importance of Institutions and Urbanization,” Economic Development & Cultural Change, 51(4), 883–896.
Johansen, S. and K. Juselius (1990), “Maximum Likelihood Estimation and Inference on Cointegration with Applications the Demand for Money,” Oxford Bulletin of Economics and Statistics, 52(2), 169-210.
Karikari, J.A. (1992), “Causality between Direct Foreign Investment and Economic Output in Ghana,” Journal of Economic Development, 17, pp. 1-12.
Khawar, M. (2005), “Foreign Direct Investment and Economic Growth: A Cross Country Analysis,” Global Economy Journal, 5 (1): 1-11.
Klein, M., C. Aaron, and B. Hadjimichael (2001), “Foreign Direct Investment and Poverty Reduction,” Paper presented at the OECD Conference on New Horizons and Policy Challenges for Foreign Direct Investment in the 21st Century, 26-27 November, Mexico City.
Ministry of Finance, Economic Reports, 2001/2002/2006. Kuala Lumpur.
Mody, A., and A. Murshid (2002), “Growing Up with Capital Flows,” IMF Working Paper WP/02/75. Washington, DC: IMF.
Nair-Reichert, U., & Weinhold, D. (2001), “Causality Tests for Cross-Country Panels: A New Look at FDI and Economic Growth in Developing Countries,” Oxford Bulletin of Economics and Statistics, 63(2), 153–171.
Narayan, P.K.(2004), “Fiji Tourism Demand: the ARDL Approach to Cointegration,” Tourism Economics, 10(2): 193-206.
Nunnenkamp, P. (2004), “To What Extent Can Foreing Direct Investment Help Achieve International Development Goals?,” The World Economy, 27 (5): 657-77.
Pesaran et al. (1996), “Testing for the Existence of a Long Run Relationship,” DAE Working papers, No.9622.
Pesaran, M., Shin, Y. and Smith, R. J. (2001), “ Bounds Testing Approaches to the Analysis of Level Relationships,” Journal of Applied Econometrics, 16, 289-326.
Seabra, F and L. Flach (2005), “Foreign Direct Investment and Profit Outflows: A Causality Analysis For the Brazilian Economy,” Economics Bulletin, 6(1), pp.1-15
Shan J., Tian G.G., and Sun F. (1997), “The FDI-led Growth Hypothesis: Further Econometric Evidence from China,” Economic Division Working Papers 97/2, NSDS, Australia.
Sims, C. (1972), “Money, Income and Causality,” American Economic Review, 62(4), 540-52.
Toda, H.Y and Yamamoto, T. (1995), “Statistical Inference in Vector Autoregressions with Possibly integrated Processes,” Journal of Econometrics, 66, 225-250.
Tsai, P. (1994), “Determinants of Foreign Direct Investment and Its Impact on Economic Growth,” Journal of Economic Development, 19: 137-63.
United Nations Conference on Trade and Development (UNCTAD) Foreign Direct Investment Online Statistics. http://stats.unctad.org/fdi.
World Investment Report. (2008), UNCTAD.
World Bank. (2006), World Development Indicator2006. Softcopy Database. World Bank.