The Relationship between Interest Rate, Exchange Rate, Inflation Rate and GDP to Foreign Direct Investment Inflows in Malaysia

Malaysia received substantial amounts of foreign direct investment (FDI) inflows over the past decades. This study examines the relationship between interest rate, exchange rate, inflation rate and gross domestic production (GDP) to FDI inflows in Malaysia. The study uses quarterly data from 2000 to...

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Main Author:	Mohd Sufli, Yusof
Format:	Thesis
Language:	eng
Published:	2009
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/3645/1/s86902.pdf
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id	my-uum-etd.3645
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng
advisor	Mohamed Naim, Asmadi
topic	HG Finance
spellingShingle	HG Finance Mohd Sufli, Yusof The Relationship between Interest Rate, Exchange Rate, Inflation Rate and GDP to Foreign Direct Investment Inflows in Malaysia
description	Malaysia received substantial amounts of foreign direct investment (FDI) inflows over the past decades. This study examines the relationship between interest rate, exchange rate, inflation rate and gross domestic production (GDP) to FDI inflows in Malaysia. The study uses quarterly data from 2000 to 2007 and control for determinants of their inwards FDI in Malaysia. The purpose of the study is also to find out the most important variables in determining FDI inflows to Malaysia. Finally, the results which were obtained by using normal time series regressions show that the most important determinant are GDP and followed by interest rate. Both independent variables also show the positive sign of relationship with FDI inflows in Malaysia. However, the inflation level is not a significant variable.
format	Thesis
qualification_name	masters
qualification_level	Master's degree
author	Mohd Sufli, Yusof
author_facet	Mohd Sufli, Yusof
author_sort	Mohd Sufli, Yusof
title	The Relationship between Interest Rate, Exchange Rate, Inflation Rate and GDP to Foreign Direct Investment Inflows in Malaysia
title_short	The Relationship between Interest Rate, Exchange Rate, Inflation Rate and GDP to Foreign Direct Investment Inflows in Malaysia
title_full	The Relationship between Interest Rate, Exchange Rate, Inflation Rate and GDP to Foreign Direct Investment Inflows in Malaysia
title_fullStr	The Relationship between Interest Rate, Exchange Rate, Inflation Rate and GDP to Foreign Direct Investment Inflows in Malaysia
title_full_unstemmed	The Relationship between Interest Rate, Exchange Rate, Inflation Rate and GDP to Foreign Direct Investment Inflows in Malaysia
title_sort	relationship between interest rate, exchange rate, inflation rate and gdp to foreign direct investment inflows in malaysia
granting_institution	Universiti Utara Malaysia
granting_department	College of Business (COB)
publishDate	2009
url	https://etd.uum.edu.my/3645/1/s86902.pdf
_version_	1747827618489565184
spelling	my-uum-etd.36452013-11-20T06:51:22Z The Relationship between Interest Rate, Exchange Rate, Inflation Rate and GDP to Foreign Direct Investment Inflows in Malaysia 2009 Mohd Sufli, Yusof Mohamed Naim, Asmadi College of Business (COB) College of Business HG Finance Malaysia received substantial amounts of foreign direct investment (FDI) inflows over the past decades. This study examines the relationship between interest rate, exchange rate, inflation rate and gross domestic production (GDP) to FDI inflows in Malaysia. The study uses quarterly data from 2000 to 2007 and control for determinants of their inwards FDI in Malaysia. The purpose of the study is also to find out the most important variables in determining FDI inflows to Malaysia. Finally, the results which were obtained by using normal time series regressions show that the most important determinant are GDP and followed by interest rate. Both independent variables also show the positive sign of relationship with FDI inflows in Malaysia. However, the inflation level is not a significant variable. 2009 Thesis https://etd.uum.edu.my/3645/ https://etd.uum.edu.my/3645/1/s86902.pdf text eng validuser http://lintas.uum.edu.my:8080/elmu/index.jsp?module=webopac-l&action=fullDisplayRetriever.jsp&szMaterialNo=0000337135 masters masters Universiti Utara Malaysia ______(1996). MIDA (Malaysian Industrial Development Authority) 1996, Annual Report 96, MIDA, Kuala Lumpur. ______(2007). Ministry of International Trade and Industry, Malaysia’s Individual Action Plan, available at http://www.miti.gov.my Akpokodje, G. 1998. Macroeconomic Policies and Private Investment in Nigeria: Rekindling Investment for Economic Development in Nigeria. Selected papers in Annual conference, Nigerian Economic Society. Aitken, Brian, Gordon H. Hanson, and Ann E. Harrison. 1997. "Spillovers, Foreign Investment and Export Behavior." Journal of International Economics 43: 103-32. Athukorala, P. and S.K. Jayasuriya. (2000). “Trade Policy Reforms and Industrial Adjustment in Sri Lanka.” The World Economy 23(1): 387-404. Barrell, R. and N. Pain. (1996). "An Econometrics Analysis of U.S. Foreign Direct Investment." Review of Economics and Statistics 78: 200-7. Bennassy-Quere, A. and Fontagne, L.(1999).“Exchange Rate Strategies in the Competition for Attracting FDI.” University of Amiens and CEPII. Chow, H.K. and Kim, Y. (2003). “A common currency peg in East Asia? Perspectives from Western Europe.” Journal of Macroeconomics 25: 331–350. Cohen, D. (1993). “Low investment and large LDC in the 1980s.” American Economic Review 83(2): 437-449. Encarnation, D.J. (1993). “Beyond Trade: Foreign Investment in U.S.-Japan and EC-Japan Rivalries.” Harvard Business School Manuscript. Froot, K. and Stein, J. (1991). “Exchange Rates and FDI: An Imperfect Capital Markets Approach.” Quarterly Journal of Economics. Gastanaga, Victor M., Jeffrey B. Nugent and Bistra, P. (1998). “Host Country Reforms and FDI Inflows: How Much Difference Do They Make?” World Development 26(7): 1299-1314 IMF (2001). World Economic Outlook. Washington, DC: International Monetary Fund. Kruger and Jan (2001). “Foreign Direct Investment.” The Namibian Economist, [online] available at http://www.economist.com.na/200/2302301/story13htm. Li, X. and Xiaming L. (2005). “Foreign Direct Investment and Economic Growth: An Increasingly Endogenous Relationship.” World Development 33(3): 393-407. Markusen, J. and Anthony V. (1999). “Foreign Direct Investment as a Catalyst for Industrial Development.” European Economic Review 43(2): 335-356. Milner, Helen V., and Keiko Kubota (2005). “Why the Move to Free Trade? Democracy and Trade Policy in the Developing Countries.” International Organization 59: 107-143. Goldstein, M. (1998). “The Asian financial crisis: causes, cures, and systematic Implications.” Institute for International Economics. Washington, D.C. Ito, T. (1999) Capital inflows in Asia. Working Paper 7134, NBER, Cambridge, MA (http:// papers.nber.org/papers/W7134.pdf) Kohlhagen, Steven W. (1997). “Exchange Rate Changes, Profitability and Direct Foreign Investment.” Southern Economic Journal 44: 376-383. Markusen, J. and A. Venables, (1999). “Foreign direct investment as a catalyst for industrial development.” European Economic Review 43(20): 335-356. Pesaran, et. al. (2001). “Bounds Testing Approaches to the Analysis of Long-run Relationships.” Journal of Applied Econometrics 16: 289-326. Sato, M. (2003). “Taxing capital flows: An empirical comparative analysis.” Journal of Development Economics 72: 203-221. Tham Siew-Yean (2003). “Foreign Direct Investment in Malaysia.” Asian Development Bank RETA 5994: A Study on Regional Integration and Trade-Emerging Policy Issues for Selected Developing Member Countries, ADB, Manila. UNCTAD (2005). Foreign Direct Investment Database [online] Internet Posting: http://www.unctad.org/Templates/Page.asp?intItemID=1923&lang=1. Wang, Zhen, Q., Swain and Nigel (1997). “Determinants of inflow of foreign direct investment in Hungary and China: Time series approach.” Journal of International Development 9(5): 695-726.

The Relationship between Interest Rate, Exchange Rate, Inflation Rate and GDP to Foreign Direct Investment Inflows in Malaysia

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