REVISITING THE DETERMINANTS OF ECONOMIC GROWTH: THE CASE OF MALAYSIA

Abstract

This paper examines the effects of export, Foreign Direct Investment (FDI) and trade openness on the Malaysian economic growth during 1970-2013 using econometrics techniques. The results from Johansen and Juselius (1990) cointegration test signify the existence of a long-run stable equilibrium relationship among all the variables in this model. In addition, the empirical results of this study reveal that the exports and FDI are the determinants of economic growth. Out of which, real growth domestic product (GDP) is more responsive with the country’s export compared to FDI. Therefore, policymakers should emphasise on human capital development which in turn enables the country to produce high-value-added products to enhance the sustainability of exports.