The determinants of foreign direct investment inflows in Malaysia / Brenda Beckul Wang

Foreign Direct Investment is the main key in order for the economy to stimulate. It is
essential for both developing and developed country. A developing country like
Malaysia as shown how important is the role of FDI in the economy. This study is
from 1987-2017 has been conducted as to enhance the previous study. This study is
using Ordinary Least Square to get the results. The independent variables which were
used in this study are exchange rate, inflation rate and trade openness. The results of
the multiple regression showed that inflation rate and trade openness have positive
relationship while exchange rate has negative relationship. Besides, all the three
independent variables have significant relationship with FDI in Malaysia as the p�value of study is less than 5 per cent significant level. Augmented Dickey-Fuller and
Philip Perron has been used for the testing of unit root test in this study. Furthermore,
in order to test the presence of multicollinearity, VIF has been conducted while to test
the presence of heteroskedasticity, Breusch-Pagan test has been used. In order to test
for autocorrelation, Breusch-Pagan-Godfrey Serial Correlation LM test has also been
conducted. Due to the presence of heteroskedasticity, lag had been applied in this
model in order for it to be fit.