Factors Influencing Foreign Direct Investment in the Manufacturing Sector of Malaysia
This study is meant to identify local(country-related) factors that affect foreign direct investment (FDI) in the manufacturing sector of Malaysia. FDI in Malaysia was concentrated in the agricultural and extractive industries until the early post-independent period when efforts to diversify th...
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| Main Author: | |
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| Format: | Thesis |
| Language: | English English |
| Published: |
1992
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| Subjects: | |
| Online Access: | http://psasir.upm.edu.my/id/eprint/8039/1/FEP_1992_3_A.pdf |
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| Summary: | This study is meant to identify local(country-related)
factors that affect foreign direct investment (FDI) in the
manufacturing sector of Malaysia. FDI in Malaysia was
concentrated in the agricultural and extractive industries
until the early post-independent period when efforts to
diversify the country's economy were initiated. Generally,
industrialization has brought several positive effects
however, it also features a few weaknesses such as narrow
manufacturing base and manufactured exports and under
utilization of local resources. The different rates of
investment across the various manufacturing industries in the country can be associated with the pattern of FDI which is concentrated in certain industries such as electrical and
textile. Therefore, it is important to conduct a study on
factors affecting FDI in Malaysia so that policy-makers can
hopefully benefit from the findings of the study in
making the appropriate policies to improve the distribution of
FDI across the manufacturing industries. Previous studies
show that FDI activities can be explained by theory of
comparative advantage, industrial organization as well as
investment theory. To determine the factors influencing FDI in
the Malaysian manufacturing, both quantitative and qualitative
analyses were conducted. In the quantitative analysis, gross
national product(GNP),level of external reserve (lagged one
year), interest rate, manufacturing output/GNP, current profit
of foreign controlled manufacturing companies and total asset
of local financial systems how significant positive
relationship with FDI while public investment rate shows
significant negative relationship. The qualitative analysis
concludes that economic and social stability; freedom of
repatriation; avail ability of efficient labour force; existence
of physical infrastructures;efficiency of financial
institutions; tariff and trade protection; currency stability;
market avail ability; and public sector efficiency are among the roost important determinants of FDI. |
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