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The impact of domestic investment on economic growth in Malaysia

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Title
The impact of domestic investment on economic growth in Malaysia
Type
Final Year Project
Main Author
Fazlin Jarraw
Subject
HG Finance
Language Code
eng
Bibliographic Details
Place of Production
Tanjong Malim
Publisher
Fakulti Pengurusan dan Ekonomi
Year of publication
2025
Degree Type
First Degree
Corporate Name
Perpustakaan Tuanku Bainun

Abstract

The study examines the impact of domestic investment on economic growth in Malaysia together with the labour force and foreign direct investment. This study has used the autoregressive distributed lag (ARDL) model to analyse the annual data over fifty-three years, testing unit roots of the variables, cointegration, and long- and short-run relationships. The results of this study highlight that there is long run cointegration among variables of domestic investment (DI), labour force (LAB), foreign direct investment (FDI), and economic growth (GDP) in Malaysia. Labour force and foreign direct investment has a positive impact on Malaysia_s economic growth in the long run, but domestic investment shows the opposite. Furthermore, all the variables (DI, LAB, FDI) have positive impact on economic growth in the short run. The findings suggest that policies should improve its investment efficiency and productivity, enhance financing access for domestic investment, and provide more tax incentives and subsidies to domestic investors. Moreover, to maintain a positive relationship between labour and economic growth in Malaysia, human capital needs to reinforce and as for FDI, the government should attract high-quality investments such as investing in green technology and automation to increase innovation in the country.

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