An Empirical Study on the Determinants of FDI in Malaysia and its Link to Trade (1978-2002)

This paper examines the link between inward FDI and trade and how each affects the other in Malaysia. This study is based on annual time series data from the years 1978-2002. The main method of study is via the gravity model which is normally used to determine the extent of trade flows. This study i...

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Main Author:	Lau, Ming Sern
Format:	Thesis
Language:	eng eng
Published:	2005
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/1253/1/LAU_MING_SERN.pdf https://etd.uum.edu.my/1253/2/1.LAU_MING_SERN.pdf
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id	my-uum-etd.1253
record_format	uketd_dc
spelling	my-uum-etd.12532013-07-24T12:11:08Z An Empirical Study on the Determinants of FDI in Malaysia and its Link to Trade (1978-2002) 2005-05-11 Lau, Ming Sern Faculty of Economics Faculty of Economics HG Finance This paper examines the link between inward FDI and trade and how each affects the other in Malaysia. This study is based on annual time series data from the years 1978-2002. The main method of study is via the gravity model which is normally used to determine the extent of trade flows. This study incorporates the gravity model to measure FDI using an augmented gravity model in order to link trade and inward FDI. The results of this study indicate that imports actually induce higher inward FDI which inward FDI itself does not induce higher trade levels through imports. While the findings are generally in line with the literature and empirical studies, it also serves to validate the earlier theories of FDI namely the factors which determines the entry mode of inward FDI into Malaysia. This means that MNC’s would generally prefer to initially penetrate the Malaysian markets via exports before setting up production here. Thus, trade through imports can be said to be a precursor of future inward FDI. 2005-05 Thesis https://etd.uum.edu.my/1253/ https://etd.uum.edu.my/1253/1/LAU_MING_SERN.pdf application/pdf eng validuser https://etd.uum.edu.my/1253/2/1.LAU_MING_SERN.pdf application/pdf eng public masters masters Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
topic	HG Finance
spellingShingle	HG Finance Lau, Ming Sern An Empirical Study on the Determinants of FDI in Malaysia and its Link to Trade (1978-2002)
description	This paper examines the link between inward FDI and trade and how each affects the other in Malaysia. This study is based on annual time series data from the years 1978-2002. The main method of study is via the gravity model which is normally used to determine the extent of trade flows. This study incorporates the gravity model to measure FDI using an augmented gravity model in order to link trade and inward FDI. The results of this study indicate that imports actually induce higher inward FDI which inward FDI itself does not induce higher trade levels through imports. While the findings are generally in line with the literature and empirical studies, it also serves to validate the earlier theories of FDI namely the factors which determines the entry mode of inward FDI into Malaysia. This means that MNC’s would generally prefer to initially penetrate the Malaysian markets via exports before setting up production here. Thus, trade through imports can be said to be a precursor of future inward FDI.
format	Thesis
qualification_name	masters
qualification_level	Master's degree
author	Lau, Ming Sern
author_facet	Lau, Ming Sern
author_sort	Lau, Ming Sern
title	An Empirical Study on the Determinants of FDI in Malaysia and its Link to Trade (1978-2002)
title_short	An Empirical Study on the Determinants of FDI in Malaysia and its Link to Trade (1978-2002)
title_full	An Empirical Study on the Determinants of FDI in Malaysia and its Link to Trade (1978-2002)
title_fullStr	An Empirical Study on the Determinants of FDI in Malaysia and its Link to Trade (1978-2002)
title_full_unstemmed	An Empirical Study on the Determinants of FDI in Malaysia and its Link to Trade (1978-2002)
title_sort	empirical study on the determinants of fdi in malaysia and its link to trade (1978-2002)
granting_institution	Universiti Utara Malaysia
granting_department	Faculty of Economics
publishDate	2005
url	https://etd.uum.edu.my/1253/1/LAU_MING_SERN.pdf https://etd.uum.edu.my/1253/2/1.LAU_MING_SERN.pdf
_version_	1747827106402795520

An Empirical Study on the Determinants of FDI in Malaysia and its Link to Trade (1978-2002)

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