Comparative study on macroeconomic determinants of foreign direct investment in Malaysia and China / Akmafira Syamimi Jamaludin

The purpose of this paper is to examine the determinants of foreign direct investment (FDI) in Malaysia and China. This research paper used macroeconomic variables such as GDP, inflation, interest rate, money growth, openness and exchange rate as the independent variables and FDI as the dependent variables. This research paper consists of four objectives which is the first is to examine the relationship of macroeconomic variables and the inflow of FDI in Malaysia and China. Second is to investigate which macroeconomic variable is more dominant in determining the inflow of FDI in Malaysia and China. Next is to determine whether Malaysia and China having similar characteristics towards FDI and last is find out whether the findings on determinants of FDI is similar with the previous studies. Data for the foreign direct investment (FDI) and the macroeconomic variables which are GDP, inflation, interest rate, money growth, openness and exchange rate are derived from the Economist Intelligent Unit (EIU) country data and World Bank Database. The time period selected is for 31 years which is from 1985 to 2015. This research paper also used multiple regressions to explain the relationship of FDI with macroeconomics variables. It was found that of all macroeconomic variables taken, only GDP, inflation, interest rate and exchange rate had significance impact on FDI inflows into Malaysia. It also found only openness has significant impact on FDI into China.