Impact of macroeconomic indicators toward economic growth in Malaysia / Kelleon Lin Ko Chuan

Tax is a crucial tool in adjusting the economic policy and main sources for the
government in collecting revenue for the public expenditure. This study is to aim in
analysing how much tax contributes to shaping economic development. Through this final
project, all the evidence is gathered to prove a significant correlation between income taxes
towards GDP in Malaysia. Another variable is included for comparison by determining
their correlation towards Malaysian economic growth. The time-series data period from
1989 until 2018 were chosen for observation. The variation of a test is used for examining
the correlation of independent variables towards the dependent variables. The findings in
this regression model show that only foreign direct investment provides a significant link
towards the Malaysian economic development. While other variables include income tax,
inflation and unemployment do not show a significant correlation in encouraging the
growth of economic in Malaysia. This research purpose is aiming in providing an outlooks
to the policymaker in Malaysia especially in adjusting the tax policy for an adequate tax
system. Besides, the outlook on inflation, unemployment rate and foreign direct investment
should always be considered by the policymaker in Malaysia for encouraging a significant
growth of economic.