MACROECONOMIC DETERMINANTS OF FOREIGN DIRECT INVESTMENT INFLOWS IN MALAYSIA

This paper is about the macroeconomic determinants of foreign direct investment inflows in Malaysia. FDI inflows are always fluctuating in Malaysia due to the stability of the macroeconomy. Therefore, the main goal of this paper is to explore the consequences of the selected macroeconomic determinants (market size, inflation and trade openness) on FDI inflows. Besides, three hypotheses have been developed based on the empirical findings of previous works of literature. To conduct this research, the secondary data for Malaysia will be collected for 48 years starting from 1974 to 2021 as a sample dataset. Moreover, several time-series statistical analyses will be conducted. According to the empirical findings resulting from the OLS regression analysis, market size and trade openness provide significant and positive consequences on FDI inflows in Malaysia, while inflation provides a negative, but insignificant consequence on FDI inflows in Malaysia. Apart from that, this research brings a few implications such as enhancing macroeconomic policies, producing new things etc. Lastly, several limitations are discovered in this research and several recommendations are provided to address the respective limitations in further research