Trade linkages of inward and outward FDI: Evidence from Malaysia
Developing and transition economies are an increasingly important source of outward foreign direct investment (OFDI). The objective of this paper is to fill the gap in the literature regarding outward foreign direct investment by adopting the well known gravity model to examine the relationship betw...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Elsevier
2013
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| Online Access: | http://eprints.sunway.edu.my/217/ http://eprints.sunway.edu.my/217/1/Wong%20Koi%20Nyen%20-%20Trade%20linkages%20of%20inward%20and%20outward%20FDI%20Evidence.pdf |
| _version_ | 1848801774634270720 |
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| author | Goh, Soo Khoon Wong, Koi Nyen * Tham, Siew Yean |
| author_facet | Goh, Soo Khoon Wong, Koi Nyen * Tham, Siew Yean |
| author_sort | Goh, Soo Khoon |
| building | SU Institutional Repository |
| collection | Online Access |
| description | Developing and transition economies are an increasingly important source of outward foreign direct investment (OFDI). The objective of this paper is to fill the gap in the literature regarding outward foreign direct investment by adopting the well known gravity model to examine the relationship between trade (export and import), inward and outward FDI using Malaysia as a case. This contributes to the literature as previous studies on OFDI in Malaysia have focused primarily on the determinants of these outward flows, and there are no studies examining the impact of OFDI on trade. Based on Hausman-Taylor estimation method, our findings reveal that inward foreign direct investment (IFDI) conforms to the observed pattern of a complementary relationship between FDI and trade, while OFDI and trade linkages are not significant as OFDI is dominated by the services sector, which generally is non-tradable. However, intra-firm trade in services could be increased through the process of fragmentation or outsourcing. |
| first_indexed | 2025-11-14T21:12:48Z |
| format | Article |
| id | sunway-217 |
| institution | Sunway University |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T21:12:48Z |
| publishDate | 2013 |
| publisher | Elsevier |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | sunway-2172019-05-02T07:53:49Z http://eprints.sunway.edu.my/217/ Trade linkages of inward and outward FDI: Evidence from Malaysia Goh, Soo Khoon Wong, Koi Nyen * Tham, Siew Yean HF Commerce Developing and transition economies are an increasingly important source of outward foreign direct investment (OFDI). The objective of this paper is to fill the gap in the literature regarding outward foreign direct investment by adopting the well known gravity model to examine the relationship between trade (export and import), inward and outward FDI using Malaysia as a case. This contributes to the literature as previous studies on OFDI in Malaysia have focused primarily on the determinants of these outward flows, and there are no studies examining the impact of OFDI on trade. Based on Hausman-Taylor estimation method, our findings reveal that inward foreign direct investment (IFDI) conforms to the observed pattern of a complementary relationship between FDI and trade, while OFDI and trade linkages are not significant as OFDI is dominated by the services sector, which generally is non-tradable. However, intra-firm trade in services could be increased through the process of fragmentation or outsourcing. Elsevier 2013-09 Article PeerReviewed text en cc_by http://eprints.sunway.edu.my/217/1/Wong%20Koi%20Nyen%20-%20Trade%20linkages%20of%20inward%20and%20outward%20FDI%20Evidence.pdf Goh, Soo Khoon and Wong, Koi Nyen * and Tham, Siew Yean (2013) Trade linkages of inward and outward FDI: Evidence from Malaysia. Economic Modelling, 35. pp. 224-230. ISSN 0264-9993 http://www.sciencedirect.com/science/article/pii/S0264999313002538 http://dx.doi.org/10.1016/j.econmod.2013.06.035 |
| spellingShingle | HF Commerce Goh, Soo Khoon Wong, Koi Nyen * Tham, Siew Yean Trade linkages of inward and outward FDI: Evidence from Malaysia |
| title | Trade linkages of inward and outward FDI: Evidence from Malaysia |
| title_full | Trade linkages of inward and outward FDI: Evidence from Malaysia |
| title_fullStr | Trade linkages of inward and outward FDI: Evidence from Malaysia |
| title_full_unstemmed | Trade linkages of inward and outward FDI: Evidence from Malaysia |
| title_short | Trade linkages of inward and outward FDI: Evidence from Malaysia |
| title_sort | trade linkages of inward and outward fdi: evidence from malaysia |
| topic | HF Commerce |
| url | http://eprints.sunway.edu.my/217/ http://eprints.sunway.edu.my/217/ http://eprints.sunway.edu.my/217/ http://eprints.sunway.edu.my/217/1/Wong%20Koi%20Nyen%20-%20Trade%20linkages%20of%20inward%20and%20outward%20FDI%20Evidence.pdf |