The determinants of inward fdi in selected services industries in Malaysia

Research output: Contribution to journalArticle

Abstract

In its drive to achieve a high-income country status, Malaysia aspires to attract more private investment into the services sector. However, empirical studies on the determinants of foreign direct investment (FDI), especially in the services sector, are sparse, even more so at the industry level. The location theory asserts that FDI inflows into a host country are determined by variables related to resources, infrastructure, market conditions, cost and business environment. This paper investigates the validity of the location theory on Malaysia using a set of panel data for eight services industries from 2003 to 2010. We find that at the industry level, market size, ICT infrastructure and human capital have significantly influenced FDI inflows into the services sector. However, the impact of FDI liberalisation is not significant compared to the dynamic changes of the other variables as progress in FDI liberalization is slow and limited.

Original languageEnglish
Pages (from-to)215-231
Number of pages17
JournalPrague Economic Papers
Volume27
Issue number2
DOIs
Publication statusPublished - 1 Jan 2018

Fingerprint

Service industries
Foreign direct investment
Malaysia
Service sector
Investment liberalization
Location theory
Industry
Income
Market size
Market conditions
Host country
Empirical study
Costs
Human capital
Private investment
Panel data
Resources
Business environment

Keywords

  • Foreign direct investment
  • Malaysia
  • Panel data
  • Services liberalisation
  • Services sector

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Cite this

The determinants of inward fdi in selected services industries in Malaysia. / Tham, Siew Yean; Rew, Kam Jia Yi; bin Noh, Nirwan.

In: Prague Economic Papers, Vol. 27, No. 2, 01.01.2018, p. 215-231.

Research output: Contribution to journalArticle

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