Absorptive capacity impact on the relationship between foreign direct investment and economic growth in Malaysia

The nexus between FDI and economic growth have been debated widely by many scholars. There are lots of different perceptions between FDI and GDP. Though the relationship is proved to be different, it depends on the absorptive capacity of the host country. For the host country to exploit spillovers f...

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Main Author:	Aziz, Nusra Izzaty
Format:	Thesis
Language:	English English
Published:	2022
Subjects:	H Social Sciences (General) HG Finance
Online Access:	http://eprints.utem.edu.my/id/eprint/26935/1/Absorptive%20capacity%20impact%20on%20the%20relationship%20between%20foreign%20direct%20investment%20and%20economic%20growth%20in%20Malaysia.pdf http://eprints.utem.edu.my/id/eprint/26935/2/Absorptive%20capacity%20impact%20on%20the%20relationship%20between%20foreign%20direct%20investment%20and%20economic%20growth%20in%20Malaysia.pdf
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id	my-utem-ep.26935
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spelling	my-utem-ep.269352023-10-16T10:37:00Z Absorptive capacity impact on the relationship between foreign direct investment and economic growth in Malaysia 2022 Aziz, Nusra Izzaty H Social Sciences (General) HG Finance The nexus between FDI and economic growth have been debated widely by many scholars. There are lots of different perceptions between FDI and GDP. Though the relationship is proved to be different, it depends on the absorptive capacity of the host country. For the host country to exploit spillovers from FDI, it needs to have a minimum amount of absorptive capacity. Therefore, in this thesis, the relationship between FDI and GDP in Malaysia was first investigated. Then, absorptive capacity, which is only limited to human capital, financial development, and trade openness, was included in the relationship between FDI and economic growth to determine the effectiveness of absorptive capacity towards the relationship between FDI and economic growth in Malaysia. The data was collected from World Development Indicator (WDI) from the duration of 1975 to 2019. In order to analyse the relationship between FDI and economic growth with the presence of absorptive capacity in Malaysia, Automated Regression Distributed Lag (ARDL) techniques were adopted to obtain the results. Firstly, preliminary analysis was taken to avoid spurious regression. The first stage analysis included is Augmented Dickey-Fuller, and Phillips Perron unit root test analysis was conducted to determine the stationarity of the variables. Then, ARDL cointegration bounds testing determined the cointegration of each model. Based on the results, short-run and long-run analysis were tested by using ARDL and Error Correction Models (ECM). By analysing the analysis in Stata 16 software, the unit root test results show that all the variables are stationary but at a different level of stationarity. Thus, ARDL bounds testing was tested to test the presence of cointegration in the models. The results show that there is cointegration in all models. The direct impact of FDI towards growth only shows a short-run relationship. Meanwhile, when human capital, financial development, and trade openness are the moderating factors, all of the models show a positive relationship for both the long and short run. Apparently, by the presence of absorptive capacity, the results of FDI and economic growth relationship showing only short-run effect. These results proved that absorptive capacity impact on the relationship between FDI and economic growth in Malaysia could only be determined in the short run. Also, the diagnostic test shows no autocorrelation and heteroskedasticity in the models. CUSUMSQ test signifies the specification of the model. 2022 Thesis http://eprints.utem.edu.my/id/eprint/26935/ http://eprints.utem.edu.my/id/eprint/26935/1/Absorptive%20capacity%20impact%20on%20the%20relationship%20between%20foreign%20direct%20investment%20and%20economic%20growth%20in%20Malaysia.pdf text en public http://eprints.utem.edu.my/id/eprint/26935/2/Absorptive%20capacity%20impact%20on%20the%20relationship%20between%20foreign%20direct%20investment%20and%20economic%20growth%20in%20Malaysia.pdf text en validuser https://plh.utem.edu.my/cgi-bin/koha/opac-detail.pl?biblionumber=122211 mphil masters Universiti Teknikal Malaysia Melaka Faculty of Technology Management and Technopreneurship Yahaya, Siti Norbaya
institution	Universiti Teknikal Malaysia Melaka
collection	UTeM Repository
language	English English
advisor	Yahaya, Siti Norbaya
topic	H Social Sciences (General) HG Finance
spellingShingle	H Social Sciences (General) HG Finance Aziz, Nusra Izzaty Absorptive capacity impact on the relationship between foreign direct investment and economic growth in Malaysia
description	The nexus between FDI and economic growth have been debated widely by many scholars. There are lots of different perceptions between FDI and GDP. Though the relationship is proved to be different, it depends on the absorptive capacity of the host country. For the host country to exploit spillovers from FDI, it needs to have a minimum amount of absorptive capacity. Therefore, in this thesis, the relationship between FDI and GDP in Malaysia was first investigated. Then, absorptive capacity, which is only limited to human capital, financial development, and trade openness, was included in the relationship between FDI and economic growth to determine the effectiveness of absorptive capacity towards the relationship between FDI and economic growth in Malaysia. The data was collected from World Development Indicator (WDI) from the duration of 1975 to 2019. In order to analyse the relationship between FDI and economic growth with the presence of absorptive capacity in Malaysia, Automated Regression Distributed Lag (ARDL) techniques were adopted to obtain the results. Firstly, preliminary analysis was taken to avoid spurious regression. The first stage analysis included is Augmented Dickey-Fuller, and Phillips Perron unit root test analysis was conducted to determine the stationarity of the variables. Then, ARDL cointegration bounds testing determined the cointegration of each model. Based on the results, short-run and long-run analysis were tested by using ARDL and Error Correction Models (ECM). By analysing the analysis in Stata 16 software, the unit root test results show that all the variables are stationary but at a different level of stationarity. Thus, ARDL bounds testing was tested to test the presence of cointegration in the models. The results show that there is cointegration in all models. The direct impact of FDI towards growth only shows a short-run relationship. Meanwhile, when human capital, financial development, and trade openness are the moderating factors, all of the models show a positive relationship for both the long and short run. Apparently, by the presence of absorptive capacity, the results of FDI and economic growth relationship showing only short-run effect. These results proved that absorptive capacity impact on the relationship between FDI and economic growth in Malaysia could only be determined in the short run. Also, the diagnostic test shows no autocorrelation and heteroskedasticity in the models. CUSUMSQ test signifies the specification of the model.
format	Thesis
qualification_name	Master of Philosophy (M.Phil.)
qualification_level	Master's degree
author	Aziz, Nusra Izzaty
author_facet	Aziz, Nusra Izzaty
author_sort	Aziz, Nusra Izzaty
title	Absorptive capacity impact on the relationship between foreign direct investment and economic growth in Malaysia
title_short	Absorptive capacity impact on the relationship between foreign direct investment and economic growth in Malaysia
title_full	Absorptive capacity impact on the relationship between foreign direct investment and economic growth in Malaysia
title_fullStr	Absorptive capacity impact on the relationship between foreign direct investment and economic growth in Malaysia
title_full_unstemmed	Absorptive capacity impact on the relationship between foreign direct investment and economic growth in Malaysia
title_sort	absorptive capacity impact on the relationship between foreign direct investment and economic growth in malaysia
granting_institution	Universiti Teknikal Malaysia Melaka
granting_department	Faculty of Technology Management and Technopreneurship
publishDate	2022
url	http://eprints.utem.edu.my/id/eprint/26935/1/Absorptive%20capacity%20impact%20on%20the%20relationship%20between%20foreign%20direct%20investment%20and%20economic%20growth%20in%20Malaysia.pdf http://eprints.utem.edu.my/id/eprint/26935/2/Absorptive%20capacity%20impact%20on%20the%20relationship%20between%20foreign%20direct%20investment%20and%20economic%20growth%20in%20Malaysia.pdf
_version_	1783728754144575488

Absorptive capacity impact on the relationship between foreign direct investment and economic growth in Malaysia

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