Economic Growth in Malaysia: a Determinants Study

Lim, Su Ci (2025) Economic Growth in Malaysia: a Determinants Study. Final Year Project (Bachelor), Tunku Abdul Rahman University of Management and Technology.

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Abstract

This study aims to explore the factors influencing economic growth in Malaysia by investigating the relationships between government spending, foreign direct investment (FDI), female labour participation rate, and economic growth. Using annual time series data spanning from 1990 to 2021, Gross Domestic Product (GDP) per capita is employed as the dependent variable, while government spending (GOVT), foreign direct investment (FDI), and female labour participation rate (FLP) are considered as independent variables. To achieve this goal, the study utilizes various statistical tests. Firstly, the Augmented Dickey Fuller (ADF) test is employed to assess the presence of unit roots in the data. Next, the Johansen cointegration test is utilized to examine the existence of cointegration relationships among the variables. Furthermore, the Vector Error Correction Model (VECM) and Granger causality test are applied to analyse the relationships between the variables in both the short and long run. The findings suggest a negative correlation between government spending, foreign direct investment, female labour participation rate, and economic growth in Malaysia.