The impact of domestic and foreign direct investments on economic growth: evidence from ASEAN countries

In this paper, the dynamic relationships between foreign direct investment (FDI), domestic investment and other determinants of economic growth were examined. Both the short-run and long-run growth processes were modelled using the ARDL approach to carry out cointegration analysis for five ASEAN countries. The main results included (i) domestic investment, FDI, human capital and financial intermediation significantly affected economic growth; (ii) FDI had a positive and significant effect on growth but this was of lesser magnitude as compared to domestic investment; and (iii) a strong support was found for an export-led-growth hypothesis, and the impact of technology transfer from international trade was larger than direct technology transfer from FDI. All in all, our empirical results from the ASEAN countries confirm the view that investments and exports are the engines of growth and it is worthwhile for the authorities to encourage domestic as well as foreign capital to put these countries back on their pre-crisis growth paths

Foreign direct investment and economic growth in Malaysia: interactions with human capital and financial deepening

This paper explores the role of foreign direct investment (FDI) in economic growth in Malaysia, appropriately controlling for other proximate drivers of economic growth: domestic investment, exports, financial markets, and human capital. Domestic capital formation, FDI, human capital, and financial deepening significantly affect economic growth. FDI has a positive and significant effect on economic growth, but its effect is of lesser magnitude than that of domestic investment. Human capital and financial markets interact with FDI and, thus, are important for both short- and long-term growth processes. The results suggest that it is important to encourage domestic as well as foreign investment to put Malaysia back on its precrisis growth path

Foreign Direct Investment and Economic Growth in Malaysia: Interactions with Human Capital and Financial Deepening

This paper explores the role of foreign direct investment (FDI) in economic growth in Malaysia, appropriately controlling for other proximate drivers of economic growth: domestic investment, exports, financial markets, and human capital. Domestic capital formation, FDI, human capital, and financial deepening significantly affect economic growth. FDI has a positive and significant effect on economic growth, but its effect is of lesser magnitude than that of domestic investment. Human capital and financial markets interact with FDI and, thus, are important for both short- and long-term growth processes. The results suggest that it is important to encourage domestic as well as foreign investment to put Malaysia back on its precrisis growth path.domestic investment, economic growth, FDI, financial markets,