AN EMPIRICAL ANALYSIS ON THE RELATIONSHIP BETWEEN MACROECONOMIC FACTORS AND ECONOMIC GROWTH: EVIDENCE FROM MALAYSIA

Abstract

Malaysia is one of the most successful developing countries and is now on its way to becoming a developed country. Although Malaysia has experienced severe negative GDP growth, the country has proved to the world that they are capable of overcoming difficulties. This research looks on the relationship between economic growth and macroeconomic factors such as interest rates, inflation, foreign direct investment, and trade openness in Malaysia. Method of model estimation which is Ordinary Least Squares is employed in this study. The results show that only the relationship between inflation and economic growth is positive, while the relationship with interest rate, foreign direct investment, and trade openness is negative.