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The relationship between economic growth and foreign direct investment in Malaysia analysis based on location advantage theory

Foreign direct investment is an important indicator to boost the economic growth of Malaysia. Foreign direct investment was identified as a medium in order to acquire skills, knowledge, technologies and to internationalize business and at the same time to reduce debts. However, in the year 2009, inf...

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Main Authors: Derrick Tanggapan, Caroline Geetha B. Arokiadasan, Rosle @ Awang Mohidin, Vivin Vincent Chandran Munusamy
Format: Article
Language:English
English
Published: OMICS Publishing 2011
Subjects:
HG4501-6051 Investment, capital formation, speculation
Online Access:https://eprints.ums.edu.my/id/eprint/32355/3/The%20relationship%20between%20economic%20growth%20and%20foreign%20direct%20investment%20in%20Malaysia%20analysis%20based%20on%20location%20advantage%20theory%20_ABSTRACT.pdf
https://eprints.ums.edu.my/id/eprint/32355/1/The%20relationship%20between%20economic%20growth%20and%20foreign%20direct%20investment%20in%20Malaysia%20analysis%20based%20on%20location%20advantage%20theory.pdf
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spelling my.ums.eprints.323552022-04-25T01:22:48Z https://eprints.ums.edu.my/id/eprint/32355/ The relationship between economic growth and foreign direct investment in Malaysia analysis based on location advantage theory Derrick Tanggapan Caroline Geetha B. Arokiadasan Rosle @ Awang Mohidin Vivin Vincent Chandran Munusamy HG4501-6051 Investment, capital formation, speculation Foreign direct investment is an important indicator to boost the economic growth of Malaysia. Foreign direct investment was identified as a medium in order to acquire skills, knowledge, technologies and to internationalize business and at the same time to reduce debts. However, in the year 2009, inflow of foreign direct investments into Malaysia had decline as much as 81.13 percent. McKern (1996), Kathuria (1998, 2000 and 2001) and Noorbakhsh et al., (2001) believed that foreign direct investment does not take place automatically in a nation. Whereby, inflow of foreign direct investment should be encouraged. Hence, this study aims to identify which location advantage channels and its threshold value that can influence the inflow of foreign direct investment into Malaysia. Location advantage channels were formed using human capital development, financial development and environmental condition whilst foreign direct investment was used as an interactive term as well as an independent variable. The results revealed that, without incorporating interactive terms, all the location advantage channels were able to stimulated economic growth. However, when location advantage channels were used as an interactive term with foreign direct investment, the result revealed that all the interactive term variables become insignificant towards economic growth. Thus, the study support that a certain value of location advantage channels are important as a precondition for foreign direct investment to have a positive effect on economic growth in Malaysia. OMICS Publishing 2011 Article PeerReviewed text en https://eprints.ums.edu.my/id/eprint/32355/3/The%20relationship%20between%20economic%20growth%20and%20foreign%20direct%20investment%20in%20Malaysia%20analysis%20based%20on%20location%20advantage%20theory%20_ABSTRACT.pdf text en https://eprints.ums.edu.my/id/eprint/32355/1/The%20relationship%20between%20economic%20growth%20and%20foreign%20direct%20investment%20in%20Malaysia%20analysis%20based%20on%20location%20advantage%20theory.pdf Derrick Tanggapan and Caroline Geetha B. Arokiadasan and Rosle @ Awang Mohidin and Vivin Vincent Chandran Munusamy (2011) The relationship between economic growth and foreign direct investment in Malaysia analysis based on location advantage theory. International Journal of Economics and Management Sciences, 1. pp. 24-31. ISSN 2162-6359 https://www.hilarispublisher.com/open-access/the-relationship-between-economic-growth-and-foreign-direct-investment-in-malaysia-analysis-based-on-location-advantage-theory-2162-6359-1-013.pdf
institution Universiti Malaysia Sabah
building UMS Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Malaysia Sabah
content_source UMS Institutional Repository
url_provider http://eprints.ums.edu.my/
language English
English
topic HG4501-6051 Investment, capital formation, speculation
spellingShingle HG4501-6051 Investment, capital formation, speculation
Derrick Tanggapan
Caroline Geetha B. Arokiadasan
Rosle @ Awang Mohidin
Vivin Vincent Chandran Munusamy
The relationship between economic growth and foreign direct investment in Malaysia analysis based on location advantage theory
description Foreign direct investment is an important indicator to boost the economic growth of Malaysia. Foreign direct investment was identified as a medium in order to acquire skills, knowledge, technologies and to internationalize business and at the same time to reduce debts. However, in the year 2009, inflow of foreign direct investments into Malaysia had decline as much as 81.13 percent. McKern (1996), Kathuria (1998, 2000 and 2001) and Noorbakhsh et al., (2001) believed that foreign direct investment does not take place automatically in a nation. Whereby, inflow of foreign direct investment should be encouraged. Hence, this study aims to identify which location advantage channels and its threshold value that can influence the inflow of foreign direct investment into Malaysia. Location advantage channels were formed using human capital development, financial development and environmental condition whilst foreign direct investment was used as an interactive term as well as an independent variable. The results revealed that, without incorporating interactive terms, all the location advantage channels were able to stimulated economic growth. However, when location advantage channels were used as an interactive term with foreign direct investment, the result revealed that all the interactive term variables become insignificant towards economic growth. Thus, the study support that a certain value of location advantage channels are important as a precondition for foreign direct investment to have a positive effect on economic growth in Malaysia.
format Article
author Derrick Tanggapan
Caroline Geetha B. Arokiadasan
Rosle @ Awang Mohidin
Vivin Vincent Chandran Munusamy
author_facet Derrick Tanggapan
Caroline Geetha B. Arokiadasan
Rosle @ Awang Mohidin
Vivin Vincent Chandran Munusamy
author_sort Derrick Tanggapan
title The relationship between economic growth and foreign direct investment in Malaysia analysis based on location advantage theory
title_short The relationship between economic growth and foreign direct investment in Malaysia analysis based on location advantage theory
title_full The relationship between economic growth and foreign direct investment in Malaysia analysis based on location advantage theory
title_fullStr The relationship between economic growth and foreign direct investment in Malaysia analysis based on location advantage theory
title_full_unstemmed The relationship between economic growth and foreign direct investment in Malaysia analysis based on location advantage theory
title_sort relationship between economic growth and foreign direct investment in malaysia analysis based on location advantage theory
publisher OMICS Publishing
publishDate 2011
url https://eprints.ums.edu.my/id/eprint/32355/3/The%20relationship%20between%20economic%20growth%20and%20foreign%20direct%20investment%20in%20Malaysia%20analysis%20based%20on%20location%20advantage%20theory%20_ABSTRACT.pdf
https://eprints.ums.edu.my/id/eprint/32355/1/The%20relationship%20between%20economic%20growth%20and%20foreign%20direct%20investment%20in%20Malaysia%20analysis%20based%20on%20location%20advantage%20theory.pdf
https://eprints.ums.edu.my/id/eprint/32355/
https://www.hilarispublisher.com/open-access/the-relationship-between-economic-growth-and-foreign-direct-investment-in-malaysia-analysis-based-on-location-advantage-theory-2162-6359-1-013.pdf
_version_ 1760231014763855872
score 13.211869

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