THE IMPACT OF DOMESTIC INVESTMENT ON ECONOMIC GROWTH: NEW EVIDENCE FROM MALAYSIA

Abstract

This paper investigates the relationship between domestic investment and economic growth in Malaysia. In order to achieve this purpose, annual data for the periods between 1960 and 2015 was tested by using Correlation analysis, Johansen co-integration analysis of Vector Error Correction Model and the Granger-Causality tests. According to the result of the analysis, it was determined that there is a positive effect of domestic investment, exports and labors on economic growth in the long run term, however, there is no relationship between domestic investment and economic growth in the short run term. These results provide en evidence that domestic investment, exports and labors are seen as a source of economic growth in Malaysia