The quality of institution and foreign direct investmnet (FDI) in Malaysia

Zulkefly Abdul Karim, and Mohd Azlan Shah Zaidi, and Mohd Adib Ismail, and Bakri Abdul Karim, (2012) The quality of institution and foreign direct investmnet (FDI) in Malaysia. Asian Journal of Accounting and Governance, 3 . pp. 61-69. ISSN 2180-3838


Official URL:


Since the 1990’s, institutional 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 in regards to small open economies. This paper attempts to investigate the role of institutions in regards to the inflow of FDI in Malaysia’s small open economy of Malaysia. Using the bounds testing approach (ARDL model), empirical findings reveal that a long-run relationship exists between FDI and institutional variables. Several institutional variables are found to play prominent roles in influencing the inflow of FDI, namely governmental stability, bureaucracy and corruption. Thus, providing and maintaining the quality of domestic institutions alongside the implementation of FDI friendly policies would be beneficial to Malaysian economic growth stemming from foreign investment.

Item Type:Article
Keywords:Institutions; Foreign Direct Investment (FDI); ARDL
Journal:Asian Journal of Accounting and Governance
ID Code:5692
Deposited By: Mr Azam
Deposited On:06 Dec 2012 03:29
Last Modified:14 Dec 2016 06:39

Repository Staff Only: item control page