Strategic HRM Essay Example | Topics and Well Written Essays - 3000 words

Strategic HRM - Essay Example Only 6 percent of the employers have experienced growth during this time. In order to understand the utility of strategic human resource management in the organizations, this study aims to discuss the issues of unemployment during the economic downturn and recession that recently shook the international economy. The effect of the global economic downturn includes insolvency, bankruptcy, and declining revenue of the employers, decreasing purchasing power of the people, and most importantly unemployment, downsizing. The intention is to analyze every dimension of effect of recession on the human resources, so that the implications of strategic human resource management in global financial crisis can be understood. The second part of the study would discuss the strategic moves that the employers and human resource department of the organization can take in order to manage the human resource in the organization because downsizing is not the solution to reduce cost, but it decreases the po ol of skilled workforce in the firm, which affects the company negatively (Galinsky, and Bond, 2009, p. 1-2). The latest data that is available from the Office of National Statistics (ONS) reveals that the employment of 460,000 people has decreased in UK since recession of 2008. The major portion of these employees is full time workers, but after recession the level of part-time employees has risen compared to the full time employees. This reason is obvious; the companies want to hire those whom they have to pay less. The full times employees had to be paid salary according to the labour policies, and also have to provide the other facilities which a full time employee is liable to get. So it can be depicted that the human resource strategy when most of the employers in UK and other parts of the world applied was rigorous downsizing, which resulted in mass unemployment (Philpott, 2012, p. 2). Any person is regarded as unemployed if that individual is out of work and is badly in a ne ed of work to earn his/ her living. The figures of unemployment are calculated by the Office of National Statistics. During recession this organization survey after an interval of three months in order to capture the true status of job loss and unemployment. As soon as the recession surface, the rate of employment reduced considerably within few months. About 1.6 million job cuts were seen in the first few months of recession. During the end of 2009, the job cuts peaked to 2.5 million, which was the highest till then in the history of UK. However, in 2011 it further increased to 2.7 million, which was the highest unemployment level in UK in 17 years. Even the unemployment rate of women in the affected economies increased considerably. IN 2012, the first deduction in unemployment level was seen, which a positive signal (BBC News, 2012). If the output cost due to unemployment during recession is evaluated, it would be seen that the worth of the output decreased because of the rising l evel of unemployment. Considering about 2.67 million job cut in 2011, it can be said that the economy of the country lost about ?129 billion of the output, due to increasing level of unemployment. However, this loss was not the result of the unemployment of all of these unemployed people in UK because about 1.6 million people were already unemployed before recession. Recession added to the existing rate of employment. This amounted to about ?132 billion, which is about 9.4 percent of the GDP of UK in 2011. It goes without

Case study Example | Topics and Well Written Essays - 1000 words - 28

Case Study Example Mechanism should take the four concept developed in the version of a television commercial convert to same advertisement concept. Mekanism can further launch them online without purchasing media space and instead increase the power of social media to spread the ads online. For PLP Company to market and distribute their RTD teas in North America it needs a wider range of customer power for the sales of their products as customer is the most important asset and priority of any business enterprise. To build the customers base by implementing new techniques in mobilizing the customers like the social networking sites online. For the brand Brisk, they have to influence and convince other customers using some brands like the Arizona to switch to Brisk to increase the sales turnover There is stiff competition between the companies advocating their brand attempt to create awareness to customers about the brands through the media, storytelling, and the traditional television commercials. While the Brink’s sales were growing fast, the brand was still falling behind its competitors in term of its social media presence. For example in the summer of 2010, brisk competitors such as Arizona. Snapple and SoBe had all built significant stronger social media following than Brisk. Arizona, which regularly ran popular contest on Facebook, had garnered almost 250 times more customers on it than Brisk and more than 20 times more followers on Twitter. The acronym is Pepsi Lipton Partnership. It is a business marketing strategy between the Pepsi Company and the Lipton. The companies formed a 50-50 joint venture called the Pepsi Lipton tea Partnership to enhance their marketing strategy. The collaboration allowed Lipton to take advantage of PepsiCo’s strong presence in the market across the world, and it has well developed bottling system and distribution networks. In return, PepsiCo would benefit from Lipton’s reputation as a

Attorney Obligation Essay Example | Topics and Well Written Essays - 250 words

Attorney Obligation - Essay Example The attorney is entitled to keep any information provided by client confidential. The attorney should ensure that they feel strongly about the client; that they portray enthusiasm about the case they are handling. The attorney is expected to wholly represent and be loyal to the client avoiding any conflict of interest in their role as the defense attorney. Goldman (2006) states that the prosecuting attorney who is usually appointed by the judicial district is charged with the responsibility of conducting legal obligations on behalf of people or the state. He or she is entitled to ethical obligations just like the defense attorney. These obligations include: To ensure the person the person being prosecuted is the individual who committed the crime; to ensure the constitutional rights of the individual being prosecuted are upheld at all times; and to ensure that all individuals are treated equally, irrespective of their power or

Weighted Average Cost of Capital (WACC) Essay Example | Topics and Well Written Essays - 1250 words

Weighted Average Cost of Capital (WACC) - Essay Example nologies Incorporated), principally involved in the integration of radiology images information into healthcare enterprise networks improving radiology workflow efficiencies, reduces operating costs and improves medical decision making processes. Thomson One (2004) will be utilized on this financial analysis process for it provides a complete presentation of various companies’ profile, financial statements, and past and projected operations that are very useful to investors, creditors, and other business entities as well for financial analysis purposes prior to business acquisition, purchase, merger, or investment undertakings. Thomson One exhibited quantitative information of the 3-year business operations of Siemens Medical Solutions Diagnostics Limited. Presented were financial statements as of 09/30/2007, 12/31/2006, and 12/31/2005. The most recent financial statement recorded was on 09/30/2007 and the balance sheet have these values (presented in millions): Total Assets (all current and 0 long term) = 784.41; Total Liabilities (all current and 0 long term) = 306.43; Total Shareholder’s Equity (all common equity and 0 preferred equity) = 477.99. For the rate of change year over year starting from 2006 (2005 as the base year), it can be observed that all components of the balance sheet had marginally increased: Total Assets = 83.03%; Total Liabilities = 303.16%; and Total Shareholder’s Equity = 19.83%. By 2007, Total Assets unfavorably dropped by 11.56%; Total Liabilities was decreased by 29.68%; and Total Shareholder’s Equity had increased by 5.95%. For the Income Statement of the company, the 3-year business operations had been profitable with its peak year on 2006 generating a marginal net profit of 262.685 (million), equivalent to 337.99% increase from 59.975 profit during 2005. On 2007, net income had decreased to 49.302, equivalent to 81.23% decrease in profit from the previous year’s business operation. Thomson One presents the 5-year

UK Courts Essay Example | Topics and Well Written Essays - 1750 words

UK Courts - Essay Example Some arguments specifically identify the choice to eliminate trial by jury in the most complex fraud cases, suggesting that such cases can be more appropriately heard by a panel of judge or judge and magistrates. Attorney General Lord Goldsmith states â€Å"it is about justice...making sure serious fraudsters are brought to trial" (BBC News, 2005). Kevin Martin, president of the Law Society is against the new proposal, as he suggests That the problem does not lie with juries, but with poor management of court cases. There is concern that doing away with juries will erode public confidence in the legal system. This is a legitimate concern. Lack of confidence in the legal system may lead to lack of cooperation with police and others who serve to uphold the law. Interviews with UK citizens indicate that while the jury system can be flawed, it should be maintained in all cases. A poll of UK citizens by News Online provides as with insight into public opinion. One UK citizen believes tha t the jury system should be upheld at all costs, as failing to do so would allow the state to relinquish its authority to the victims, in deciding punishment. Another feels that trial by â€Å"jury of one’s peers† is still the most fair, claiming that judges are made up of social elite, â€Å"deciding the fate of us, the common folk† (News Online Poll, 2001), which would lead to injustice.

Husserls Phenomenology Essay Example for Free

Husserls Phenomenology Essay Why is phenomenology such an important branch of philosophical thought in terms of understanding media and its social, political, and technological impact? Phenomenology is the philosophical thought that focuses on the structure of subjective human consciousness. This philosophical movement was founded by Edmund Husserl who â€Å"wants to describe our experiences as they are given from a first person perspective† (Zahavi, 2003, p. 13). Husserl describes the conception of reality in 3 parts. Firstly there’s the world and its external beings, this being the world around us made up of other things and other people. Secondly we have ourselves, and thirdly we have our subjective consciousness, the way we perceive the world around us. Husserl divides phenomenology into two parts, the noesis and the noema, the noesis being the part of an experience which explains the activity, be it an emotion, perception, judgement, or imagination. The second part is the noema, which is the way we perceive the experience, our own meaning of it, the way we conceive it. This study can be differentiated from Kant’s method of analysis which focuses on reality consisting of objects and events as they are understood by subjective human consciousness. The two main divisions of Kantian phenomenology are the noumena and the phenomena. The noumena are things independent of the mind; an object or event that exists without the use of human senses, while the phenomena are any observable occurrences. Kant theorises that what we experience through our senses questions what roles we play in terms of truth and reality. Both Kant’s and Husserl’s interpretation of phenomenology are important branches of philosophical thought when understanding media and it’s social, political, and technological impact. The political impact that media has is stretched further than the democracy of governments. The politics that media focuses on can vary from contestants on a television show to the Presidential debates of the United States. When we watch any form of politics on an edited television show, all we’re seeing is what’s presented to us; the phenomena, we experience what is given to us. It is only by our senses that we’re able to perceive what’s happening on the show. This relates to Kant’s method of analysis which states that what we experience through our senses allows us to question truth and reality. Only what we see on television enables us to question this. What is edited out or what happens back stage is the noumena, it’s not perceivable by our senses and therefore according to Kant we’re unable to comprehend it. The X Factor relies heavily on humiliation in its audition process to get viewers. Many of the advertisements for the X Factor auditions show hopeful contestants being booed or laughed at on stage by the audience. Spin off shows called â€Å"The X Factor: Best and Worst Auditions† are created purely for our entertainment. Although it may seem that the media is using a contestant’s pain for their own gain, it is argued that â€Å"by now, those appearing on reality TV should have acquired a basic understanding of its textual codes and mode of production, and should therefore be prepared for any possible outcomes†(Watts, 2011, p. 36). When schadenfreude, â€Å"enjoyment obtained from the troubles of others† (Merriam-Webster), is shown on television, the audience is faced with an ethical dilemma. They have to decide based on the phenomena around them what is right or wrong. It is up to the individual audience member to decide whether they feel the contestant is able to understand the codes of reality TV and whether the humiliation is acceptable or not. One contestant on the 2012 X Factor auditions, Zoe Alexander, was highlighted in the media due to her vulgar outburst on stage after the judges slammed her down for singing a song by an artist (Pink) for whom she had previously been a tribute act for. After saying she wanted to move away from being a tribute act and focus on her own career, she went on to sing a song by the artist Pink. According to what was shown on television, the contestant made a bad choice and was ridiculed on stage for it. She was jeered at and this resulted in her swearing at the judges and throwing her microphone on the ground. The audience were left with feelings of embarrassment for her; from what was presented to them the audience could only see her outburst. The political division of the show was between this contestant and the X Factor, and the audience had clearly picked a side. After the audition had been aired on television it soon came out that the contestant had been told to sing a Pink song by the X Factor production team prior to her audition. In interviews after the show Alexander stated â€Å"When the judges rejected me I realised I had been manipulated by the X Factor for the previous six weeks. They lured me in, coaxed me and even chose my song all with the intention of setting me up for a fall. †(Daily Mirror). It was only after the audience had become aware of the back stage antics that they were able to switch their political viewpoint to that of the contestant. The impact that media has on politics is shown through the way the media is able to influence the minds of audiences by only showing certain parts of the story. Parts of the show were edited out in order to create a political imbalance between the show and contestant. After the contestant told her side of the story, the audience realised that â€Å"There is now good reason to believe that there is a surprisingly vast range of ways the scene around you could have been visibly different from the way it actually is†(Noe, 2006, p. 191). The noumena, which was not something the audience could understand, was what was edited out of the show, as we could not sense it, it was independent of our minds. According to Kant, as soon as we become aware of it, it becomes a part of our phenomena and is now an observable occurrence. By understanding phenomenology it’s clear that it is an important part of the political impact that media has. Kant’s thoughts on phenomenology relate much to Platonism. The allegory of the cave is a metaphor to describe that what we believe to be reality may not be complete, and that illumination is needed for us to see the truth. Plato explains that the freed prisoner â€Å"wouldn’t be able to see a single one of the things he was now told were real† (Plato, 2006, p. 280). Plato gives us four levels of knowledge: shadows, objects, ideas, and forms, â€Å"in the first place, shadows, and in the second place, reflections† (Plato, 2006, p. 244) The first two levels are within with the realm of sense, shadows are things we have interaction with but no knowledge of, and objects are able to be perceived with knowledge but they still rely on senses to be seen. The next two levels eradicate senses and rely on intelligence. Ideas and forms are reflections of the lower levels and are seen as the ‘intelligible world’. In a similar way, Kant theorises that reality exists on many levels, with the phenomena being what we can sense, and the noumena being what we cannot sense, independent of the mind. Both Plato and Kant agree that knowledge is primarily reliant on sense but does not have to rely on sense alone, and that reality exists on a series of levels. The concept of realism has made huge advancements in technology over the last decade. With great progression in technology, media such as video games and cinema have transformed immensely in terms of how real they appear to their targeted audiences. New technology such as 3D cinema and D-Box enables audiences to be transported even further into the world of the film by creating a false sense of reality. By wearing 3D glasses and sitting in a stimulation chair, the cinema is able to allow the audience to be absorbed into the world of the film even further than ever before. These technological advances exhibit the power phenomenology has to intensify the experiences of watching a film or playing a game. Certain media are created to illuminate our phenomena by their transmission and the form that certain media take, â€Å"What we know of the world  (including cinematic representation) has to do with our experience of phenomena, that is, the way things appear to us. †(Casebier, 2009, p. 4) According to Husserl, knowledge â€Å"remains within experience† (Husserl, 2012, p. ), so all we know of cinema and videos games is merely a recreation of what we already know from our experiences. However it isn’t just cinema that does this, advancements in technology have enabled other media to do the same; 3D televisions and mobile phones are created for the same reason, to create a fabricated reality, a place where people can have all of the fun without any of the responsibility. Video games are created with a goal to make an interactive world which can be perceived similar to real life but without the consequences that comes with reality. Racing games are made with cars that look and sound more realistic to appeal to audiences, stimulation controllers to enable you to feel like you’re actually driving a car, but when you crash your car you’re able to start another race, when in reality there would be serious consequences. However, the question of truth and reality regarding technology can be argued against. Plato states that the representation of reality is not as clear as we may think it is. Plato states that â€Å"the quickest way is to take a mirror and turn it round in all directions, before long you will create suns and stars and earth† (Plato, 2006, p. 70). When he is told that this will only create reflections and not reality, Plato states that an artist would do the same with a paintbrush. This allegory shows that what’s real and what’s true is hard to determine because everything is a representation of the ultimate reality. Therefore the images created in technology such as video games and cinema can be seen as a construction or representation of an ultimate reality, what we perceive as real life experiences. As Husserl states â€Å"Natural knowledge begins with experience† (Husserl, 2012, p. ), it is from our experiences of real life that we’re able to even comprehend the constructed reality that is shown in media such as video games and cinema. However, being too involved in these types of simulated realities can be dangerous, they can distort our minds by making us confused between the difference of what’s true and what’s real. What is acceptable in a simulated video game such as Grand Theft Auto, such as beating people up, shooting people, stealing cars, woul d not be acceptable in real life. A distinction is needed in the mind between what is real and what is true. These experiences show the importance that phenomenology has in terms of understanding the impact media has on technology. Husserl states that human experiences are subjective, and this is true especially when referring to photography and the social impacts that certain media have on the world. Photographs are a special type of image, one that holds a subjective experience personal to the people who are in them and the people who took them. â€Å"It is not merely the likeness which is precious in such cases – but the association and the sense of nearness involved in the thing. (Sontag, 2001, p. 183) Instagram is a social networking app which allows users to upload pictures onto a database which is viewable by ‘followers’. Similar to social networking sites such as Facebook or Twitter, users can follow each other and comment on pictures that are uploaded. With the invention of such social applications personal photographs no longer serve as just memories or subjec tive images, they also serve as a way to exhibit your experiences to your social circle: your friends and family. The way we communicate and share with each other has been changed. No longer do photographs have to be developed and stuck in an album for everyone to see them, now you can upload a picture onto Facebook, Twitter, Instagram, or any similar social networking sites and it can be viewed by hundreds of people from your social circle at the same time. By sharing our experiences socially we’re able to project our experiences into the minds of others; â€Å"We behold the living experiences of others through the perception of their bodily behaviour† (Tymieniecka, 1983, p. 300). Even though pictures that are ploaded onto social networking sites are able to be sensed by others in terms of being able to see them, they will be not be aware of the meaning behind the pictures. The noumena of the pictures will be the meaning behind them; the memories and emotions that are attached with the image will not be visible to everyone who looks at it, only the people who have previous knowledge of the image will be able to have a deeper understanding of what it’s about. No matter how much you look at a photograph it will have different memories and connotations for each person who views it. The way we communicate with each other has changed in many others way than just photography. The impact media has on society is seen through the change in our communication with each other with tools such as Whatsapp and Skype. With the use of just a mobile phone you’re able to communicate with other people in so many different ways; We’re no longer limited to just calling or texting each other, now we’re able to video call, send pictures, on Facebook people are able to send each other virtual animals to each other; media has impacted the way we communicate so much so that the levels of communication are unlimited. Through doing so we’re expanding our experience of communicating with each other and therefore according to Husserl we’re expanding our knowledge of each other. The level of impact media has on communication is clear because through new methods of communication comes more information we have of each other. Phenomenology is important for understanding media and its impact on many aspects such as politics, society, and technology. Both Kant’s and Husserl’s analysis of phenomenology are vital branches of philosophical thought when thinking about the influence that media has. Through politics, media is able to hide certain aspects of the truth in order to manipulate the minds of the public. Kant’s theory of the phenomena and noumena is shown here as what the audience perceive as the truth is merely a part of it; the parts that are kept out are the noumena. What’s not perceivable by our immediate senses becomes independent of the mind. When it comes to technology, the impact that media has refers mainly to realism. The question of what is true and what is real comes into place. Media such as video games and cinema are able to create other worlds of reality in which people are absorbed into. Husserl states that it is through experience that knowledge is made, so media takes the experience that we have in the real world and build upon to create realities that are more idealistic to live in; Worlds in which people are free to do as they choose without any consequence. The only consequence of this is if people become so involved in these created worlds that they’re unable to distinguish between reality and constructed reality in the form of games or cinema. Through social issues it’s clear that phenomenology is an important issue in terms of how much of an impact media has. Social network sites enable people to share their experiences with their friends and family. Photographs no longer have to be shown to others in a physical album, now they’re visible all over the world. Husserl tells us that it is through others being and their bodily behaviour that we’re able to understand them. Therefore it’s clear that the impact that media has on society is the change of how we communicate with each other. By having new ways of talking to other people, there’s also new ways of understanding each other. Phenomenology shows that with a wider experience of communication, we’re gaining knowledge of whom and what we communicate with. Kant and Husserl both have different methods of analysis according to phenomenology, but ultimately they’re both concerned with the way the world appears to us and our subjective understanding of the world around us.

Relationship between Foreign Direct Investment and Growth

Relationship between Foreign Direct Investment and Growth Chapter 1: INTRODUCTION This study will give us an opportunity to identify the determinants of FDI that develops economic growth, to understand the importance of foreign direct investment (FDI) in enhancing the economic growth in Malaysia, and also the relationship between (FDI) and the economic growth in Malaysia. In this chapter of study, the main focus will be on research background, research objectives, research questions and also the significant of study. Research Background 1.1.1 The Trend of Foreign Direct Investment (FDI) Flow in Malaysia The relationship between the growths of FDI with countries has been a debatable issue for several decades. This has become an eye opener which agreed by (Karimi, Sharift and Yusop, 2009, p.2) which drive policymakers to engage in incentives such as export processing zone and tax incentive in order to attract FDI. However, the determinant of FDI in each country is different and failure to understand how a specific country can attract FDI will bring difficulties to changes in economy. In the case of Malaysia, in 2007 the economy was ranked at 29th largest economy in the world with gross domestic products that worth to be $357.9billion (World Bank, 2007). Despite the impact of many externalities such as, oil crises in 1970s, to downturn in electronic industry in 1980s, and majorly impact the Asian financial crisis in 1997s. According to (Ministry of Finance, 2006) the growth of economy in Malaysia was consistent from 1988 to 1996 and maintain the economic annual growth of 7-10% per annu m, by the year 2005 the main source of growth was the manufacturing sector whose share of GDP increase to 31.4 percent. The key driver for the ongoing performance of Malaysias economy is the result of policy reform which is a determinant Foreign Direct Investment (FDI) which enhances the economic growth of Malaysia. The evidence here can be seen by (Ministry of Finance, 2001) introducing the Investment Incentives Act 1968, free trade zones in early 1970s, and export incentives with open policy in 1980s has led to an establishment of FDI in the 1980s. One good example to show that the government has use policy as a determinant of FDI would be, The Promotion of Investment Act (PIA) 1986 which gave a larger percentage of foreign equity ownership in order to attract FDI to enhance economy of Malaysia. This graph illustrates the FDI inflow from 1970-2004 in Malaysia. This research shown that (Har, Teo and Yee, 2008, p.12) FDI stock in Malaysia grew tremendously from 1970s to 1990s, despite fluctuation between the years, and the growth of FDI has been promising from $94 million dollars in 1970s to $2.6 billion by 1990s. Unfortunately, in the early 1990s, the rate of FDI inflow has decrease because of the slowdown investment in Malaysia by two main sources of investors which is Japan and Taiwan. As of 1996, the FDI rate (Har, Teo and Yee, 2008, p.12) has reach its peak when Malaysia successfully accumulated $7.3 billion dollar, by the end of 1998. There has been a major reduction in FDI inflow due to the financial crisis in 1997 that affected many Southeast Asia countries. Unfortunately, by the early 2000s the inflow of FDI in Malaysia has been unpredictable and inconsistent, but still manages to generate average inflow of $3billion per year. In 2007, Malaysias inward (FDI) performance index has reduce compared to the inward (FDI) potential index which shows that Malaysia lack the capability to attract foreign investors in this recent years as seen in table1, and the key factors is because neighboring countries such as China, and India has much more attractive offers such as lower labor cost that make their business more efficient. Since the inflow FDI has been decreasing, Malaysia was ranked 71 in 2007. The table above explains that inward FDI inflow in Malaysia were only US $ 8,043 million and it was only 2.6% of total inflow of FDI to Asia and by that time China has possesses the share of as much as 26.05%.(World Investment Report, 2008) The conclusion can be made here is that Malaysias reduction inflow of FDI is mainly because their incentive are becoming less competitive compared to other countries in Asia. Problem Statement FDI is strongly recommended to achieve consistent economic growth and resulting in modernisation in industrialisation and raise the living standards of the society. There are many determinants regarding FDI and based incentive policy is one of them. Research shows that (Lam and Liew, 2009, p.435) 2 main assumption of this incentive are that high monetary incentive allows FDI to be attracted easier and high inflow of FDI might lead to higher economic growth. Unfortunately, incentive is not necessary monetary-based like tax exemption but can be a long term relationship that seeks for mutual benefits of both sides. The evidence can be seen that the total inflow of FDI into the region of South East Asia, East Asia and South Asia has increased by 15% to USD 165million in 2005 but for Malaysia despite the fact that many monetary based incentives is provided, Malaysia still experiencing a decrease in foreign direct investment. (Tomlinson, Abdullah, Kolesnikov and Jessop, 2006) In 1990, Mala ysia was ranked 4th in the world for FDI, but was ranked 62th in 2005 and recorded negative inflow of net foreign direct investment in the year 2007 More attention should be given by government, researchers and policy makers to identify the problem and produce the solution that can stimulate the FDI in Malaysia. Much research has been done to stimulate FDI, but a lot lesser research has been carried out considering international relations because mostly focus on microeconomic aspect of domestic firm performance. It is very important for foreign investors to gain confidence to invest in Malaysia, hence enhance the economic growth in Malaysia. More research should be done to determinant other determinants of FDI in order to develop the performance of economy in Malaysia. It is very important for more research to be done on FDI with international relation in order to identify the determinants of FDI that can stimulate the economic growth of Malaysia and not on incentive that only focuses on profit maximization of one sided benefits. Research Objectives The objective of carrying out this study is as below: To review the determinants of FDI that is affecting economic growth in Malaysia To analyze the relationship between FDI and economic growth in Malaysia. To evaluate some policy actions related to increase the inflow of FDI in Malaysia. Research Questions This study is conducted to address the following research questions: Do the determinants of FDI inflow affect the economic growth in Malaysia? Will relationship with FDI result in bloom of economic growth in Malaysia? How policy actions can increase the inflow of FDI in Malaysia? Chapter 2 : LITERATURE REVIEW 2.0 Introduction In this section, a review of literature will provide us with a better understanding of the determinant of FDI and the growth of economic in Malaysia. This chapter focuses on the empirical studies on the role of FDI in the economic growth of host countries. Furthermore, a conceptual framework of these variables will be provided. 2.1 Review of Literature 2.1.1 Foreign Direct Investment (FDI) Foreign Direct Investment (FDI) has associate with many leading roles in development of host countries such as source of capital, new job opportunities, diffusion of new technology into country, and develop overall economic growth of host countries. Empirical studies have been carried out to show the relationship between FDI and economic growth while others focuses more on the causality of these two variables. Different methods are use by research to find out the determinants of FDI and the relationship it has with economic growth of host countries. By using cross-section data and OLS regression, Balasubramanyam (1996) found out that host countries that impose export promoting strategy produce positive growth of FDI on the economic growth but this does not apply to host countries as imposes import substitution strategy. Cross-sectional data has also conclude that high level of institutional capability which measured by degree of property right protection and bureaucratic efficiency in host country leads to a positive effect of FDI which enhances the economic growth of host countries. (Olofsdotter, 1998) In the work of Borensztein, et al. (1998), they utilize the cross country regression framework to analyse the effect of FDI on economic growth. They use the FDI flows data from industrial countries to 69 developing countries for the past two decades. Their research provided essential information that shown FDI plays an important role in diffusing new technology in host countries, and relatively boost overall economic growth rather than domestic investment. According to another research on (Borensztein et, al.1998) developing economies which focuses on the diffusion process of technology and economic growth, they found out that the positive impact of FDI on economic growth is highly dependent on the availability of human capital in the specific host country. De Mello (1999) uses both time series and panel data fixed effects for a sample of 32 developed and developing countries to study the relationship of FDI and economic growth. However, he only found out little result showing positi ve effect of FDI that affects the economic growth of host country. There are also other research that focuses on the causality between FDI and economic growth. Zhang (2001) and Choe (2003) use co integration and Granger causality test for a sample of 11 developing countries in East Asia and Latin America. Zhang (2001) found out that 5 cases that shows enhancement of economic growth but the condition of host country is important, so factors such as macro stability and trade regime must be attractive to attract FDI in host countries. Through the research of Choe (2003), the finding of casuality between FDI and economic growth shows that FDI is dependent on the economic growth of host country and not the other way around. Little evidence was shown that FDI enhance the growth of economy, but mainly supports that rapid economic growth enhances the FDI inflow into the country. Chowdhury and Mavrotas (2003) use innovative econometric methodology to identify the causality of FDI and economic growth. The research was done using time series data from 1969 to 2000 for three developing countries that are Malaysia, Chile and Thailand. Each country involve with different background of determinants of FDI such as macroeconomic episodes, growth patterns, and policy regimes. Their study found out that GDP was the cause of growth of FDI in Chile, but it does not go the same with Malaysia and Thailand which has strong evidence of bi-directional causality of these two variables. In the case of Frimpong and Abayie (2006), In the research (Bengoa and Sanchez-Robles, 2003) by using panel data to study Latin America between the relationship of FDI and economic growth, they found out there is a positive impact of FDI that lead to increase in economic growth but the research is similar to Borensztein, et.al, (1998) that says economic development depend on the countrys stability condition. Finally, Duasa (2007) which focus on the causality between FDI and output of economic growth in Malaysia and the study found no evidence of relationship between FDI and economic growth. These has indicate that in the case of Malaysia, FDI does not cause economic growth but FDI contributes to stability of growth as growth contributes to stability of FDI. In order to understand the determinants of FDI more accurately, we can see through research done by Vernon (1966) by using product cycle hypothesis which relates to trade theory by Hufbauer (1966). The theory is about the relationship between investment theory and trade theory by using products as they are export or invested. They found out that competition prices in host countries drives foreign investors to seek cost advantages especially labour cost. This shows that innovation of countries to attract FDI is important to improve economic growth. 2.1.2 Economic growth in Malaysia Export growth can be considered as the most researched determinant factor of (FDI) in economic growth. According to Chow (1987, p.124), the export growth of development countries can be identified through the impact of increase in countrys income, non-export production of goods, resource allocation, and capital efficiency, ability in handling external shocks, negative external effects and also total productivity factor. Therefore, research has shown export strategy has been an effective factor in enhancing the economic growth of developing countries. Furthermore, these countries have also testified that export promotion is an effective development strategy (Jung and Marshall, 1985). However, export strategy is not the main determinant factor of FDI that promotes economic growth. According to Ahmand and Harnhirun (1996) research, by using time data series from 1966 until 1988 to determine whether export is the main (FDI) factor that affects countries economic growth on industrial countries like Malaysia, Philipines, Singapore and Thailand, they found out that economic growth and export is dependent on development of countrys policy, and also economic development causes export growth not the other way around. In order to (Alfano et.al, 2004) identify the relationship between FDI, financial market, economic growth and also to find out whether countries with better financial systems are able to exploit FDI effectively. An empirical analysis was done by using cross country data from 1975 to 1995 which concluded that FDI played a leading role in contributing to economic growth in 71 countries which means countries with good financial market are able to take advantage of opportunity offered by FDI. Li and Liu (2005) studied whether FDI affect economic growth by using single and simultaneous system of equation techniques to test these two variables. Their research found a significant relationship between FDI and economic growth which identified, Human capital has indirect interaction with FDI that leads to positive impact on economic growth in developing countries, whereas countries with insufficient technology knowledge will have significant negative impact on economic growth in developing countries Another study done by Hsiao and Hsiao (2006) using panel data and time series from 1986 to 2004 to identify Granger causality between GDP, export and FDI among China, Korea, Taiwan, Hong Kong, Singapore, Malaysia, Philippines and Thailand found out that FDI has direct one way effect on GDP and indirect effect through export. There was also bilateral causal relationship between export and GDP. Lastly, study done by Baharumshah and Thanoon (2006) using quantitative assessment found out that FDI effects economic growth both long-term and short term in the host countries. Their research has also shown that countries that are able to attract inflow of FDI successfully can generate more investment which leads to faster overall development of economy, hence FDI is a major contributing factor in the economy of East Asian countries. Ang (2007) use annual time series data from 1960 to 2005 in order to find out the determinants of FDI in Malaysia found out that GDP growth had a significant positive impact on FDI inflow. 2.2 Theoretical Framework Foreign direct investment (FDI) Independent variable Dependent variable Technology advancement Economic growth in Malaysia Human Capital Policy development Social GDP 2.2.1 Analysis path This framework is to understand the research of the two variables in the case of my research proposal, foreign direct investment (FDI) is the independent variable and economic growth in Malaysia would be the dependent variable. The purpose of this research proposal is to understand the relationship of FDI and economic growth in Malaysia. In addition, Malaysia can implement different FDI contributing factor that can enhance economic growth in the country. The analysis here is about the determinants of FDI and it interests me in which Malaysia can implement and make FDI more attractive to be invested by foreign firms. In this analysis, the information accumulated should provide the key determinants of FDI at the same time enhance the development of economic growth in Malaysia. Chapter 3: METHODOLOGY 3.0 Introduction This section describes the research methodology use in the study to access the relationship between FDI and economic growth in Malaysia. Simple ordinary least square (OLS) regression and the empirical analysis are done using annual data of FDI and economic growth in Malaysia over the 1970-2005 periods. The research was done using annual data from IMF international Financial Statistic tables, published by International Monetary Fund to find out the relationship between FDI and economic growth in Malaysia. 3.1 Data 3.1.1 Data Resources According to Romano (2004), primary data can be define as data that is collected specially for the purpose of answering research question, while secondary data can be define as existing data collected in order to answer different research project. Secondary data was chosen for this research because it is less expensive compared to primary data, and takes less time to collect data that is needed for research. (Romano, 2004) Secondary data has made information far easier to be obtain by interpreting information from primary data and published them through secondary resource such as newspaper, journals, books, internet, and also research reports. () The existence of secondary data happens when a project needs the collection of data that has already been research in order to further understand the research question on a new project That is why secondary data is essential in order for us because it provide us with the knowledge to form research design and also answering our research quest ions in a more in depth scale. 3.1.2 Data Analysis Procedure In order to complete this research proposal we have mainly use secondary resource such as journals, websites, books, and also research report. Secondary resource has provided us with the information needed at the same time save us time and cost. KBU International College has provided us with books that contain the information needed for us to make references for our research topic. Internet network has been a major contribution by using the Google Chromes search engine we are able to obtain various journals and reports from websites that allows us to make reference and understand our research objectives. Emerald website in particular by using Anglia Ruskin University account has granted us the access to various journals that are easy to obtain without any hassle. The usage of less text book is because the library has insufficient information needed to answer our research questions. 3.2 Hypothesis Null hypothesis H0: FDI is not important for transporting advance technology to enhance host country economic growth. Alternate hypothesis H1: FDI is important for transporting advance technology to enhance host country economic growth. Technology advancement is essential in developing economic growth because it produces skilled labor that will enhance productivity and satisfying demands from consumer. According to Easterly et al. (1995), technology transfer depends on the diffusion process and can take place in 4 forms which is transfer of new technologies and ideas, high technology imports, foreign technology adoption and also level of human capital. Diffusion process of technology into host countries can be different depending on the human capital and availability of technology in the country itself. Example, study made by Borensztein (1998) on developing economies concluded that FDI has positive economy growth but the effect of magnitude depends on the availability of human capital in the host country. This clearly shows that advance technology is very important to enhance economic growth at different level of diffusion growth. Null hypothesis H0: Economic stability is not important to attract FDI into the country Alternate hypothesis H2: Economic stability is important to attract FDI into the country Many countries should pay more attention to economic stability in order to attract FDI which can enhance economic growth. With a stable economy it portrays a positive image and good economic positioning, which in turn attracts foreign investors to invest and generate profit from the investment made in the foreign country as a guaranteed. Therefore, determinants of economic stability should be given attention, the determinants are such as exports, and government expenditure, domestic consumption, and exchange rate that should be manage well by government. According to the research done by Kogid,et.al,(2010) , the most important determinant of economic stability in Malaysia is export and consumption expenditure. Their study also found out that government expenditure and exchange rate are less effective on economic growth but it does not mean it should be ignored but these factors can be act as catalyst and complement factor of economic growth. Null hypothesis H0: Implication of policy does not promote economic growth. Alternate hypothesis H3: Implication of policy does promote economic growth Implication of policy reform is important to draw attention of foreign investment. Policies to promote growth have evidence but it does not work for other countries. This can be seen from the study made by Ahmad and Harnhirun (1996) which studied on new industrial countries such as Indonesia, Malaysia, Philipines, Singapore and Thailand that found out export and economic growth dependent on development of policy. Therefore, government should impost relevant policies to attract FDI into Malaysia. Example, policies like joint venture which give opportunities to domestic producer to become one with foreign investors. This way will benefit local partner as they have exposure towards technology. 3.3 Limitation Theoretical framework of FDI that is use to analyses the FDI determinants and economic growth in Malaysia could have been done more accurately with more secondary resources. Firstly, KBU International College provides insufficient books that have relation with this research topic. However, KBU does provide student with the account to access Emerald websites that contains many research journals and reports that is very convenient for our research topic. In addition, some determinants of FDI in the theoretical framework were not taken into consideration because there has been insufficient research done on some determinants of FDI that affects economic growth in Malaysia. As a result, this research is not entirely completed to reflect the full extent of FDI on Malaysias economy growth. Since this research is mainly dependent on opinions of researchers around the world, this may lead to inaccuracy of research because they might disagree with research and opinions done by other authors around the world. 4.0 Ethical Consideration Before the research is done, respondents will be notified regarding the aim, benefits and purpose of the research is conducted and the method that is engage to carry out this research so that respondent will be able to understand the reason of caring out this research and the potential hazard level of this research. There are also no pressure of any kind shall be force for individual to become subject of research. In addition, respondents have the permission to withdraw or terminate from participating and becoming subject of the research. These are the ethical action taken so that there will be no violation of human rights. The identity of respondents from who involves in the survey is strictly confidential and shall be discarded once research is completed unless permission is granted by respondents for publish sake. No information of respondents will be revealed and included in the final report. Relationship between Foreign Direct Investment and Growth Relationship between Foreign Direct Investment and Growth Chapter 1: INTRODUCTION This study will give us an opportunity to identify the determinants of FDI that develops economic growth, to understand the importance of foreign direct investment (FDI) in enhancing the economic growth in Malaysia, and also the relationship between (FDI) and the economic growth in Malaysia. In this chapter of study, the main focus will be on research background, research objectives, research questions and also the significant of study. Research Background 1.1.1 The Trend of Foreign Direct Investment (FDI) Flow in Malaysia The relationship between the growths of FDI with countries has been a debatable issue for several decades. This has become an eye opener which agreed by (Karimi, Sharift and Yusop, 2009, p.2) which drive policymakers to engage in incentives such as export processing zone and tax incentive in order to attract FDI. However, the determinant of FDI in each country is different and failure to understand how a specific country can attract FDI will bring difficulties to changes in economy. In the case of Malaysia, in 2007 the economy was ranked at 29th largest economy in the world with gross domestic products that worth to be $357.9billion (World Bank, 2007). Despite the impact of many externalities such as, oil crises in 1970s, to downturn in electronic industry in 1980s, and majorly impact the Asian financial crisis in 1997s. According to (Ministry of Finance, 2006) the growth of economy in Malaysia was consistent from 1988 to 1996 and maintain the economic annual growth of 7-10% per annu m, by the year 2005 the main source of growth was the manufacturing sector whose share of GDP increase to 31.4 percent. The key driver for the ongoing performance of Malaysias economy is the result of policy reform which is a determinant Foreign Direct Investment (FDI) which enhances the economic growth of Malaysia. The evidence here can be seen by (Ministry of Finance, 2001) introducing the Investment Incentives Act 1968, free trade zones in early 1970s, and export incentives with open policy in 1980s has led to an establishment of FDI in the 1980s. One good example to show that the government has use policy as a determinant of FDI would be, The Promotion of Investment Act (PIA) 1986 which gave a larger percentage of foreign equity ownership in order to attract FDI to enhance economy of Malaysia. This graph illustrates the FDI inflow from 1970-2004 in Malaysia. This research shown that (Har, Teo and Yee, 2008, p.12) FDI stock in Malaysia grew tremendously from 1970s to 1990s, despite fluctuation between the years, and the growth of FDI has been promising from $94 million dollars in 1970s to $2.6 billion by 1990s. Unfortunately, in the early 1990s, the rate of FDI inflow has decrease because of the slowdown investment in Malaysia by two main sources of investors which is Japan and Taiwan. As of 1996, the FDI rate (Har, Teo and Yee, 2008, p.12) has reach its peak when Malaysia successfully accumulated $7.3 billion dollar, by the end of 1998. There has been a major reduction in FDI inflow due to the financial crisis in 1997 that affected many Southeast Asia countries. Unfortunately, by the early 2000s the inflow of FDI in Malaysia has been unpredictable and inconsistent, but still manages to generate average inflow of $3billion per year. In 2007, Malaysias inward (FDI) performance index has reduce compared to the inward (FDI) potential index which shows that Malaysia lack the capability to attract foreign investors in this recent years as seen in table1, and the key factors is because neighboring countries such as China, and India has much more attractive offers such as lower labor cost that make their business more efficient. Since the inflow FDI has been decreasing, Malaysia was ranked 71 in 2007. The table above explains that inward FDI inflow in Malaysia were only US $ 8,043 million and it was only 2.6% of total inflow of FDI to Asia and by that time China has possesses the share of as much as 26.05%.(World Investment Report, 2008) The conclusion can be made here is that Malaysias reduction inflow of FDI is mainly because their incentive are becoming less competitive compared to other countries in Asia. Problem Statement FDI is strongly recommended to achieve consistent economic growth and resulting in modernisation in industrialisation and raise the living standards of the society. There are many determinants regarding FDI and based incentive policy is one of them. Research shows that (Lam and Liew, 2009, p.435) 2 main assumption of this incentive are that high monetary incentive allows FDI to be attracted easier and high inflow of FDI might lead to higher economic growth. Unfortunately, incentive is not necessary monetary-based like tax exemption but can be a long term relationship that seeks for mutual benefits of both sides. The evidence can be seen that the total inflow of FDI into the region of South East Asia, East Asia and South Asia has increased by 15% to USD 165million in 2005 but for Malaysia despite the fact that many monetary based incentives is provided, Malaysia still experiencing a decrease in foreign direct investment. (Tomlinson, Abdullah, Kolesnikov and Jessop, 2006) In 1990, Mala ysia was ranked 4th in the world for FDI, but was ranked 62th in 2005 and recorded negative inflow of net foreign direct investment in the year 2007 More attention should be given by government, researchers and policy makers to identify the problem and produce the solution that can stimulate the FDI in Malaysia. Much research has been done to stimulate FDI, but a lot lesser research has been carried out considering international relations because mostly focus on microeconomic aspect of domestic firm performance. It is very important for foreign investors to gain confidence to invest in Malaysia, hence enhance the economic growth in Malaysia. More research should be done to determinant other determinants of FDI in order to develop the performance of economy in Malaysia. It is very important for more research to be done on FDI with international relation in order to identify the determinants of FDI that can stimulate the economic growth of Malaysia and not on incentive that only focuses on profit maximization of one sided benefits. Research Objectives The objective of carrying out this study is as below: To review the determinants of FDI that is affecting economic growth in Malaysia To analyze the relationship between FDI and economic growth in Malaysia. To evaluate some policy actions related to increase the inflow of FDI in Malaysia. Research Questions This study is conducted to address the following research questions: Do the determinants of FDI inflow affect the economic growth in Malaysia? Will relationship with FDI result in bloom of economic growth in Malaysia? How policy actions can increase the inflow of FDI in Malaysia? Chapter 2 : LITERATURE REVIEW 2.0 Introduction In this section, a review of literature will provide us with a better understanding of the determinant of FDI and the growth of economic in Malaysia. This chapter focuses on the empirical studies on the role of FDI in the economic growth of host countries. Furthermore, a conceptual framework of these variables will be provided. 2.1 Review of Literature 2.1.1 Foreign Direct Investment (FDI) Foreign Direct Investment (FDI) has associate with many leading roles in development of host countries such as source of capital, new job opportunities, diffusion of new technology into country, and develop overall economic growth of host countries. Empirical studies have been carried out to show the relationship between FDI and economic growth while others focuses more on the causality of these two variables. Different methods are use by research to find out the determinants of FDI and the relationship it has with economic growth of host countries. By using cross-section data and OLS regression, Balasubramanyam (1996) found out that host countries that impose export promoting strategy produce positive growth of FDI on the economic growth but this does not apply to host countries as imposes import substitution strategy. Cross-sectional data has also conclude that high level of institutional capability which measured by degree of property right protection and bureaucratic efficiency in host country leads to a positive effect of FDI which enhances the economic growth of host countries. (Olofsdotter, 1998) In the work of Borensztein, et al. (1998), they utilize the cross country regression framework to analyse the effect of FDI on economic growth. They use the FDI flows data from industrial countries to 69 developing countries for the past two decades. Their research provided essential information that shown FDI plays an important role in diffusing new technology in host countries, and relatively boost overall economic growth rather than domestic investment. According to another research on (Borensztein et, al.1998) developing economies which focuses on the diffusion process of technology and economic growth, they found out that the positive impact of FDI on economic growth is highly dependent on the availability of human capital in the specific host country. De Mello (1999) uses both time series and panel data fixed effects for a sample of 32 developed and developing countries to study the relationship of FDI and economic growth. However, he only found out little result showing positi ve effect of FDI that affects the economic growth of host country. There are also other research that focuses on the causality between FDI and economic growth. Zhang (2001) and Choe (2003) use co integration and Granger causality test for a sample of 11 developing countries in East Asia and Latin America. Zhang (2001) found out that 5 cases that shows enhancement of economic growth but the condition of host country is important, so factors such as macro stability and trade regime must be attractive to attract FDI in host countries. Through the research of Choe (2003), the finding of casuality between FDI and economic growth shows that FDI is dependent on the economic growth of host country and not the other way around. Little evidence was shown that FDI enhance the growth of economy, but mainly supports that rapid economic growth enhances the FDI inflow into the country. Chowdhury and Mavrotas (2003) use innovative econometric methodology to identify the causality of FDI and economic growth. The research was done using time series data from 1969 to 2000 for three developing countries that are Malaysia, Chile and Thailand. Each country involve with different background of determinants of FDI such as macroeconomic episodes, growth patterns, and policy regimes. Their study found out that GDP was the cause of growth of FDI in Chile, but it does not go the same with Malaysia and Thailand which has strong evidence of bi-directional causality of these two variables. In the case of Frimpong and Abayie (2006), In the research (Bengoa and Sanchez-Robles, 2003) by using panel data to study Latin America between the relationship of FDI and economic growth, they found out there is a positive impact of FDI that lead to increase in economic growth but the research is similar to Borensztein, et.al, (1998) that says economic development depend on the countrys stability condition. Finally, Duasa (2007) which focus on the causality between FDI and output of economic growth in Malaysia and the study found no evidence of relationship between FDI and economic growth. These has indicate that in the case of Malaysia, FDI does not cause economic growth but FDI contributes to stability of growth as growth contributes to stability of FDI. In order to understand the determinants of FDI more accurately, we can see through research done by Vernon (1966) by using product cycle hypothesis which relates to trade theory by Hufbauer (1966). The theory is about the relationship between investment theory and trade theory by using products as they are export or invested. They found out that competition prices in host countries drives foreign investors to seek cost advantages especially labour cost. This shows that innovation of countries to attract FDI is important to improve economic growth. 2.1.2 Economic growth in Malaysia Export growth can be considered as the most researched determinant factor of (FDI) in economic growth. According to Chow (1987, p.124), the export growth of development countries can be identified through the impact of increase in countrys income, non-export production of goods, resource allocation, and capital efficiency, ability in handling external shocks, negative external effects and also total productivity factor. Therefore, research has shown export strategy has been an effective factor in enhancing the economic growth of developing countries. Furthermore, these countries have also testified that export promotion is an effective development strategy (Jung and Marshall, 1985). However, export strategy is not the main determinant factor of FDI that promotes economic growth. According to Ahmand and Harnhirun (1996) research, by using time data series from 1966 until 1988 to determine whether export is the main (FDI) factor that affects countries economic growth on industrial countries like Malaysia, Philipines, Singapore and Thailand, they found out that economic growth and export is dependent on development of countrys policy, and also economic development causes export growth not the other way around. In order to (Alfano et.al, 2004) identify the relationship between FDI, financial market, economic growth and also to find out whether countries with better financial systems are able to exploit FDI effectively. An empirical analysis was done by using cross country data from 1975 to 1995 which concluded that FDI played a leading role in contributing to economic growth in 71 countries which means countries with good financial market are able to take advantage of opportunity offered by FDI. Li and Liu (2005) studied whether FDI affect economic growth by using single and simultaneous system of equation techniques to test these two variables. Their research found a significant relationship between FDI and economic growth which identified, Human capital has indirect interaction with FDI that leads to positive impact on economic growth in developing countries, whereas countries with insufficient technology knowledge will have significant negative impact on economic growth in developing countries Another study done by Hsiao and Hsiao (2006) using panel data and time series from 1986 to 2004 to identify Granger causality between GDP, export and FDI among China, Korea, Taiwan, Hong Kong, Singapore, Malaysia, Philippines and Thailand found out that FDI has direct one way effect on GDP and indirect effect through export. There was also bilateral causal relationship between export and GDP. Lastly, study done by Baharumshah and Thanoon (2006) using quantitative assessment found out that FDI effects economic growth both long-term and short term in the host countries. Their research has also shown that countries that are able to attract inflow of FDI successfully can generate more investment which leads to faster overall development of economy, hence FDI is a major contributing factor in the economy of East Asian countries. Ang (2007) use annual time series data from 1960 to 2005 in order to find out the determinants of FDI in Malaysia found out that GDP growth had a significant positive impact on FDI inflow. 2.2 Theoretical Framework Foreign direct investment (FDI) Independent variable Dependent variable Technology advancement Economic growth in Malaysia Human Capital Policy development Social GDP 2.2.1 Analysis path This framework is to understand the research of the two variables in the case of my research proposal, foreign direct investment (FDI) is the independent variable and economic growth in Malaysia would be the dependent variable. The purpose of this research proposal is to understand the relationship of FDI and economic growth in Malaysia. In addition, Malaysia can implement different FDI contributing factor that can enhance economic growth in the country. The analysis here is about the determinants of FDI and it interests me in which Malaysia can implement and make FDI more attractive to be invested by foreign firms. In this analysis, the information accumulated should provide the key determinants of FDI at the same time enhance the development of economic growth in Malaysia. Chapter 3: METHODOLOGY 3.0 Introduction This section describes the research methodology use in the study to access the relationship between FDI and economic growth in Malaysia. Simple ordinary least square (OLS) regression and the empirical analysis are done using annual data of FDI and economic growth in Malaysia over the 1970-2005 periods. The research was done using annual data from IMF international Financial Statistic tables, published by International Monetary Fund to find out the relationship between FDI and economic growth in Malaysia. 3.1 Data 3.1.1 Data Resources According to Romano (2004), primary data can be define as data that is collected specially for the purpose of answering research question, while secondary data can be define as existing data collected in order to answer different research project. Secondary data was chosen for this research because it is less expensive compared to primary data, and takes less time to collect data that is needed for research. (Romano, 2004) Secondary data has made information far easier to be obtain by interpreting information from primary data and published them through secondary resource such as newspaper, journals, books, internet, and also research reports. () The existence of secondary data happens when a project needs the collection of data that has already been research in order to further understand the research question on a new project That is why secondary data is essential in order for us because it provide us with the knowledge to form research design and also answering our research quest ions in a more in depth scale. 3.1.2 Data Analysis Procedure In order to complete this research proposal we have mainly use secondary resource such as journals, websites, books, and also research report. Secondary resource has provided us with the information needed at the same time save us time and cost. KBU International College has provided us with books that contain the information needed for us to make references for our research topic. Internet network has been a major contribution by using the Google Chromes search engine we are able to obtain various journals and reports from websites that allows us to make reference and understand our research objectives. Emerald website in particular by using Anglia Ruskin University account has granted us the access to various journals that are easy to obtain without any hassle. The usage of less text book is because the library has insufficient information needed to answer our research questions. 3.2 Hypothesis Null hypothesis H0: FDI is not important for transporting advance technology to enhance host country economic growth. Alternate hypothesis H1: FDI is important for transporting advance technology to enhance host country economic growth. Technology advancement is essential in developing economic growth because it produces skilled labor that will enhance productivity and satisfying demands from consumer. According to Easterly et al. (1995), technology transfer depends on the diffusion process and can take place in 4 forms which is transfer of new technologies and ideas, high technology imports, foreign technology adoption and also level of human capital. Diffusion process of technology into host countries can be different depending on the human capital and availability of technology in the country itself. Example, study made by Borensztein (1998) on developing economies concluded that FDI has positive economy growth but the effect of magnitude depends on the availability of human capital in the host country. This clearly shows that advance technology is very important to enhance economic growth at different level of diffusion growth. Null hypothesis H0: Economic stability is not important to attract FDI into the country Alternate hypothesis H2: Economic stability is important to attract FDI into the country Many countries should pay more attention to economic stability in order to attract FDI which can enhance economic growth. With a stable economy it portrays a positive image and good economic positioning, which in turn attracts foreign investors to invest and generate profit from the investment made in the foreign country as a guaranteed. Therefore, determinants of economic stability should be given attention, the determinants are such as exports, and government expenditure, domestic consumption, and exchange rate that should be manage well by government. According to the research done by Kogid,et.al,(2010) , the most important determinant of economic stability in Malaysia is export and consumption expenditure. Their study also found out that government expenditure and exchange rate are less effective on economic growth but it does not mean it should be ignored but these factors can be act as catalyst and complement factor of economic growth. Null hypothesis H0: Implication of policy does not promote economic growth. Alternate hypothesis H3: Implication of policy does promote economic growth Implication of policy reform is important to draw attention of foreign investment. Policies to promote growth have evidence but it does not work for other countries. This can be seen from the study made by Ahmad and Harnhirun (1996) which studied on new industrial countries such as Indonesia, Malaysia, Philipines, Singapore and Thailand that found out export and economic growth dependent on development of policy. Therefore, government should impost relevant policies to attract FDI into Malaysia. Example, policies like joint venture which give opportunities to domestic producer to become one with foreign investors. This way will benefit local partner as they have exposure towards technology. 3.3 Limitation Theoretical framework of FDI that is use to analyses the FDI determinants and economic growth in Malaysia could have been done more accurately with more secondary resources. Firstly, KBU International College provides insufficient books that have relation with this research topic. However, KBU does provide student with the account to access Emerald websites that contains many research journals and reports that is very convenient for our research topic. In addition, some determinants of FDI in the theoretical framework were not taken into consideration because there has been insufficient research done on some determinants of FDI that affects economic growth in Malaysia. As a result, this research is not entirely completed to reflect the full extent of FDI on Malaysias economy growth. Since this research is mainly dependent on opinions of researchers around the world, this may lead to inaccuracy of research because they might disagree with research and opinions done by other authors around the world. 4.0 Ethical Consideration Before the research is done, respondents will be notified regarding the aim, benefits and purpose of the research is conducted and the method that is engage to carry out this research so that respondent will be able to understand the reason of caring out this research and the potential hazard level of this research. There are also no pressure of any kind shall be force for individual to become subject of research. In addition, respondents have the permission to withdraw or terminate from participating and becoming subject of the research. These are the ethical action taken so that there will be no violation of human rights. The identity of respondents from who involves in the survey is strictly confidential and shall be discarded once research is completed unless permission is granted by respondents for publish sake. No information of respondents will be revealed and included in the final report.