This paper aims to evaluate the determinants of growth in ASEAN5 countries (Malaysia, Indonesia, Thailand, Philippines and Singapore) with a special highlight is given to the foreign direct investment (FDI). ASEAN5 have received a significant amount of FDI inflow from the past three decades. The FDI inflows bring several contributions to the economies of the host countries. For example, the presence of foreign firms often implies transfers of technological capacity to the domestic countries. Besides, the competition, standard and knowledge of foreign markets can induce positive spillover effects on the productivity and competitiveness of the local firms. Other potential driver of growth such as gross domestic investment (GDI), trade oppness (TO) and population (POP) were also tested in this research paper. Therefore, the main objective of this paper is to identify the relationship between GDP and its independent variables (FDI, GDI, TO, and POP) based on classical, neo classical and neo liberal school of thoughts using annual data starting from 1970 to 2013. The findings showed that there is a long run cointegration exist for Malaysia, Indonesia, Thailand and Philippines. FDI is found to have positive relationship with growth in Malaysia, Thailand and Indonesia. Moreover, GDI is also found to be significantly influence the growth of these countries besides POP and TO. But in this case, the effect of GDI is larger than the effect of FDI thus confirming dependency theory. Overall, we can conclude that all the variables used in these studies are indeed very important towards generating growth in ASEAN5 countries. As for the case of Singapore, although there is no long run cointegration detected, the short run estimation revealed that FDI and GDI still play significant roles in determining the growth in this country.
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In-Text Citation: (Ridzuan et al., 2018)
To Cite this Article: Ridzuan, A. R., Khalid, M. W., Zarin, N. I., Razak, M. I. M., Ridzuan, A. R., Ismail, I., & Norizan, N. (2018). The Impact of Foreign Direct Investment, Domestic Investment, Trade Openness And Population on Economic Growth: Evidence from Asean-5 Countries. International Journal of Academic Research in Business and Social Sciences, 8(1), 128–143.
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