A Time Series Analysis on Foreign Direct Investment Determinants in Malaysia

Dalily Muhammad Fuad; Noor ‘Adilah Ibrahim; Neelabja Chatterjee

doi:10.37934/sijmaf.5.1.1221

Authors

Dalily Muhammad Fuad Faculty of Science and Technology, Universiti Sains Islam Malaysia, Bandar Baru Nilai, 71800 Nilai, Negeri Sembilan, Malaysia
Noor ‘Adilah Ibrahim Faculty of Science and Technology, Universiti Sains Islam Malaysia, Bandar Baru Nilai, 71800 Nilai, Negeri Sembilan, Malaysia
Neelabja Chatterjee Department of Mathematics, North Eastern Regional Institute of Science and Technology, India

DOI:

https://doi.org/10.37934/sijmaf.5.1.1221

Keywords:

Foreign direct investment, GDP per capita, inflation rate, Malaysia, population growth, time series analysis

Abstract

Using time series analysis from 1971 to 2022, this paper investigates the important economic factors influencing foreign direct investment in Malaysia. Malaysia's economic growth depends heavily on foreign direct investment, which is impacted by factors including GDP per capita, inflation rate, and population growth. This study determines the relationship between said variables and foreign direct investment using multiple linear regression model. The results suggested that both population growth and inflation rate have statistically significant effects on foreign direct investment, with population growth and inflation rate having a negative link and a positive correlation, respectively. However, in this study, GDP per capita has little bearing on foreign direct investment. These revelations help to clarify how macroeconomic variables influence investment choices.