American Journal of Applied Sciences

EXPORTS, FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM MALAYSIA (1971-2013)

Muhammad Haseeb, Nira Hariyatie Hartani, Nor’ Aznin Abu Bakar, Muhammad Azam and Sallahuddin Hassan

DOI : 10.3844/ajassp.2014.1010.1015

American Journal of Applied Sciences

Volume 11, Issue 6

Pages 1010-1015

Abstract

The main objective of this study is to empirically investigate the relationship between exports, Foreign Direct Investment (FDI) and the economic growth in Malaysia. Records of annual time series data from the year 1971 till 2013 have been utilized for this purpose. Upon testing the data for stationarity, the Auto Regressive Distributed Lag (ARDL) model has been applied for the purpose of empirical investigation. The empirical results indicate that the productivity factor and externality effect of exports on the non-export sector are found to be statistically, positively significant, with the exports also having a positive impact on the economic growth and FDI of the country. The results support Exports Led Growth (ELG) and FDI-Led economic Growth (FLG) in Malaysia. The finding further suggests that Malaysia should continuous pursue exports promotion and a liberal investment economic policy in order to maintain and bolster overall economic growth.

Copyright

© 2014 Muhammad Haseeb, Nira Hariyatie Hartani, Nor’ Aznin Abu Bakar, Muhammad Azam and Sallahuddin Hassan. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.