FDI and immigration complementarity and industrial upgrading in Malaysia

Crawford School of Public Policy
Photo by MosheA on Wikimedia Commons

Event details

PhD Seminar (Econ)

Date & time

Friday 23 October 2020


Online via Zoom


Stewart Nixon

Differing perceptions of FDI and immigration’s contributions to Malaysia’s economic development are reflected in policies and attitudes welcoming investment but restricting immigration, which in turn fuel myths surrounding their respective impacts on industrial upgrading. The results of time series estimations in this paper evidence complementary relationships between various measures of FDI and immigration in post-independence Malaysia, exhibiting important differences between formal and informal channels. Evidence of factor flow contributions to industrial upgrading is weaker and appears overstated relative to domestic factors. Nonetheless, more foreign companies and immigrants were associated with increased industrial complexity whereas FDI inflows appear biased towards low-complexity sectors. The findings suggest policy biases are harming industrial upgrading efforts both directly and by deterring new investors, exacerbating the consequences of domestic reform stagnation.

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