Time Series Analysis of inward Foreign Direct Investment Function in Malaysia

Using unconditional error correction approach, this article investigates equilibrium relationships between FDI inflows and their determinants (i.e., broadest money supply, consumer price index, exchange rates, gross domestic product, and trade). The observed findings reject the null hypothesis of no co-integration between the series. In addition, the results show that exchange rates, gross domestic product, broadest money supply, and trade have positive impact on FDI inflows. These findings could lead to further research questions that seek answers. For example, future work could add more variables to the function of inward FDI in Malaysia, such as unemployment and energy prices.