The Rapid Growth of the Malaysian Economy Essay

The Rapid Growth of the Malaysian Economy Essay

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It is well documented that Malaysia is a country that experiences fast and rapid growth in its overall economy. According to the Asian Development Bank (ADB), Malaysia has the potential to rise as one of the seven drivers of the Asian economy by 2050 led by China, India, Indonesia, Japan, South Korea, Malaysia and Thailand (Malaysian Insider, 2011). In the 1970’s, Malaysian companies started to focus on foreign investment but the numbers were still small. These investments started off focusing on banking and finance sectors of developed countries such as the US and Australia. The country only began venturing in outward foreign direct investments (OFDI) in the 1990’s. Malaysia’s OFDI has skyrocketed from a low RM0.45 billion in 1980 to RM10.41 billion in 1997, and further to RM36.7 billion in 2007 (Goh and Wong, 2011). Malaysia has been experiencing a peculiar trend when it comes to foreign investments. The country has encountered a drastic drop in FDI inflows whereas FDI outflow has been increasing at a substantial rate especially in 2007 as seen in the graph. It is worth arguing whether OFDI is a able to substitute domestic investments and will it cause a significant drop in output in the domestic markets (Stevens and Lipsey, 1992). From a different viewpoint, OFDI can also complement domestic markets and increases local industry activities by home country multinationals and, as a result boost up domestic output ( Desai et al., 2005). Therefore, there exist a conceptually causal relationship between OFDI and the domestic economic growth that could result in either way. This essay revolves around the efforts of determining the push and pull factors that influences OFDI and critically analyzing the transition effects of Malaysia to...

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...mance ambiguity, asset specificity and environment volatility are some arguments to decide whether it is wise for a firm to internalise rather than externalise their operations.

Berjaya Hotels and Resorts is a member company of the Berjaya Corporation Group of Companies. It is one of the biggest public listed conglomerate in Malaysia. The company owns several properties in Malaysia, Asia Pacific and UK. The company also has several hotels & resorts abroad, located in Seychelles, Sri Lanka, Vietnam and London. Berjaya Group Berhad acknowledges the concept of internalisation advantage as they conduct their business and operations overseas with close proximity to the company’s head management. The company has enough capital, human skills and technological capacity to fully operate the hotels and resorts on their own giving them total control of their business abroad.

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