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Institutions and foreign direct investment (FDI) in Malaysia: Empirical evidence using ARDL model

Abdul Karim, Zulkefly and Shah Zaidi, Mohd Azlan and Ismail, Mohd Adib and Abdul Karim, Bakri (2011) Institutions and foreign direct investment (FDI) in Malaysia: Empirical evidence using ARDL model. In: National Conference on the Tenth Malaysia Plan: Transformation Towards a High Income Advanced Economy, 18th July 2011, Seri Pacific Hotel, Kuala Lumpur. (Unpublished)

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Since 1990’s, institution factors have been regarded as playing important roles in stimulating foreign direct investments (FDI). However, empirical studies on their importance in affecting FDI are still lacking especially for small open economies. This paper attempts to investigate the role of institutions upon the inflow of foreign direct investment (FDI) in a small open economy of Malaysia. Using bounds testing approach (ARDL model), the empirical findings reveal that there exists a long run relationship among FDI and the institution variables.Specifically, several institution variables namely government stability, bureaucracy, and corruption are found to play prominent roles in influencing the inflow of FDI. Thus, in attracting foreign investors, implementing FDI friendly policies by providing and maintaining the quality of domestic institutions would be beneficial to Malaysian economic growth.

Item Type: Conference or Workshop Item (Paper)
Additional Information: Organized by International Journal of Management Studies (IJMS), Universiti Utara Malaysia, Malaysia Institute of Economic Research (MIER) and UUM Press
Uncontrolled Keywords: Institutions; Foreign Direct Investment (FDI); ARDL.
Subjects: H Social Sciences > HC Economic History and Conditions
Divisions: School of Business Management
Depositing User: Mrs. Norazmilah Yaakub
Date Deposited: 28 Dec 2011 01:27
Last Modified: 21 Apr 2016 04:27

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