Do public investment and FDI crowd in or crowd out private domestic investment in Malaysia?
Abstract:Motivated by the concern of a persistent decline in total investment in Malaysia during the post-crisis era, this article examines the long-run relationship between private domestic investment (PDI), public investment and foreign direct investment (FDI) in Malaysia. Using multivariate cointegration techniques, the results indicate a fairly robust cointegrated relationship between these variables during the period 1960 to 2003. Both public investment and FDI are found to be complementary to, rather than competing with, PDI.
Document Type: Research Article
Affiliations: Department of Economics, Monash University, Vic 3145, Australia
Publication date: March 1, 2009