Impact of Corruption on Foreign Direct Investments (FDI) in Malaysia

Abstract

This paper discusses the impact of corruption on foreign direct investment (FDI) in Malaysia. Corruption is an abuse of power to obtain personal benefits while foreign direct investment (FDI) refers to a growing investment relationship between nation, people and economic activities. In this regard, this study examines the relationship between corruption and FDI in Malaysia. Since this study need the latest information, this study uses quantitative secondary data. The data were obtained from 1995 to 2016.  This study covers time series data, then the statistical test such as Unit Root Test, Vector Autoregression Estimates (VAR) Test, ARDL Method Test, Breusch-Godfrey Test, White Test Heteroskedasticity and the Ramsey Reset Test are used. The results of the study show that when foreign direct investment in a country increases, the level of corruption in the country will increases as well. The corruption can be reduced by certain actions and strict laws.