Outward FDI and home country economic growth: a Malaysian case

This paper attempts to explore the causality relationship between outward foreign direct investment (OFDI) and home country economic growth using Malaysia as a case. The main findings do not advocate the OFDI-led growth hypothesis. In order to promote OFDI-led growth, the home government should prepare the private sector for increasing competition in the era of globalization so that linkages can be forged with Malaysian multinationals, and to facilitate home sourcing for OFDI activities. However, the study reveals the evidence of growth-led OFDI, which conforms to the investment development path theory that can potentially internationalize business activities of Malaysian firms abroad. JEL classification codes: F210 Department of Economics, Monash University – Sunway Campus, Malaysia E-mail: [email protected] © 2010 Koi Nyen Wong All rights reserved. No part of this paper may be reproduced in any form, or stored in a retrieval system, without the prior written permission of the author.