Title: Foreign direct investment, exports, education, and growth in Malaysia

Authors: Mohammed B. Yusoff

Addresses: Department of Economics, International Islamic University Malaysia, P.O. Box 10, 50728 Kuala Lumpur, Malaysia

Abstract: Although it has been recognised that foreign direct investment (FDI), exports, and education are important ingredients in economic development, not much research has been carried out in developing countries to determine the effects of these three variables, taken together, on economic growth. Most of these studies focus on the effects of exports on growth or FDI on growth or exports and education on growth, and FDI on growth. This paper examines the relationship of these three variables together on economic growth using the cointegration technique, VECM, and the causality tests. The results suggest that real GDP per capita, exports, FDI and education spending are cointegrated. The estimated long-run relationship shows that exports, FDI and education expenditure could explain the variation in real GDP per capita. Both the Granger and Toda-Yamamoto causality tests support the hypothesis that exports, FDI and education expenditure cause economic growth with no feedback. These imply that the Malaysian export-oriented, liberal FDI and education development strategies have played important role in the development of Malaysian economy.

Keywords: foreign direct investment; FDI; exports; education spending; economic growth; causality; Malaysia; education expenditure; education development.

DOI: 10.1504/GBER.2014.060180

Global Business and Economics Review, 2014 Vol.16 No.2, pp.111 - 122

Received: 29 Jun 2011
Accepted: 30 Jul 2012

Published online: 16 Jun 2014 *

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