Outward FDI, inward FDI, economic growth, globalization, ARDL, Malaysia


When a nation that links itself to the global market, this means that the nation would embark itself in the path towards globalization. Global markets offer greater opportunity for domestic firms to tap into larger markets around the world. This translates the possibility of having more access to more capital flow, technology, cheaper imports, and larger exports. One of the ways a domestic firm gets foreign capital, would be through Foreign Direct Investments (FDI). This study aims to look at Malaysia’s inward and outward FDI and determine their relationship with economic growth. Annual data covers over the period of 1984 to 2013 and tested based on the autoregressive distributed lag (ARDL) model. The results show that there is a positive long-run relationship between inward FDI with economic growth. It was noted that outward FDI have an indirect relationship with economic growth. There is unidirectional granger causality between them as well as between inward and outward FDI.

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