Surveying sources of economic growth: empirical evidence from Malaysia

Abstract

The main objective of this study is to evaluate the effect of various economic and social factors namely (foreign direct investment (FDI), energy consumption, exports, tourism, foreign remittances, human capital represented by educational expenditure and health expenditure) on economic growth represented by GDP per capita in Malaysia. Annual time series data during the period 1995–2015 and the Cobb-Douglas production function with Ordinary Least Squares (OLS) based on various analytical tests are used for empirical investigation. The empirical results confirm that incoming foreign direct investment, human capital, energy consumption, and tourism are the main sources of economic growth in Malaysia during the period under study. Findings of the study suggest to initiate a motivational promotion for the inhabitant towards utilization of high competence technology, constructing solid policy for export promotion, creating conducive environment for inward foreign investment, introducing effective educational and health policies for further enhancement of the pace of economic growth.