The Determinants of Economic Growth in Malaysia

Chen, Shuet Qi (2026) The Determinants of Economic Growth in Malaysia. Final Year Project (Bachelor), Tunku Abdul Rahman University of Management and Technology.

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Abstract

The purpose of this research is to examine the determinants of economic growth in Malaysia from 1990 to 2023. The dependent variable in this study is gross domestic product (GDP) growth, while the independent variables are foreign direct investment (FDI), inflation rate, government spending, and exports of goods and services. To analyse the impact of FDI, inflation rate, government spending, and exports of goods and services on GDP growth, various econometric methods such as Augmented Dickey-Fuller (ADF), Kwiatkowski Phillips Schmidt Shin (KPSS), Johansen and Juselius Cointegration Test, Vector Error Correction Model (VECM), Granger causality test, and other diagnostic tests were employed. The findings reveal that FDI demonstrates a significant negative relationship with Malaysia’s economic growth, while the inflation rate, government spending, and exports of goods and services have a significant positive impact on Malaysia’s economic growth