FDI AND TRADE - Links in the case of Malaysia

Abstract

The analysis found that FDI has facilitated the shift in the pattern of production and exports from the primary to the exportable manufacturing sectors, with biases towards major FDI investing countries and major FDI receiving industries in Malaysia since late the 1980s when inward FDI began to surge. Electricals and electronics that took the lion's share for the FDI inflows have emerged the major export sector over the analysis period of time (1988-95). The country's bilateral trade(exports) with Japan who was the most important FDI source country over the period, seemed to have experienced a significant change. These are consistent with FDI's positive effects on export promotion in host country. However, the impacts of the Asian crisis on FDI flows and subsequently on the development of trade pattern in host country have yet to be analysed.