Do public investment and FDI crowd in or crowd out private domestic investment in Malaysia?
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.
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Document Type: Research Article
Affiliations: Department of Economics, Monash University, Vic 3145, Australia
Publication date: 01 March 2009