Factors Influencing FDI Inflow to India,China and Malaysia: An Empirical Analysis

Abstract

This article attempts to find out the factors which are significantly related and influence the FDI inflow into China, India and Malaysia during the study period ranging between 1991 and 2010. The objective of FDI is almost the same, but the factors that influence foreign investors when deciding the location of investment are receiving importance and attention. Correlation has been used to study the factors influencing FDI inflow. The study revealed that India and China are very similar, whereas in Malaysia the same factors do not influence inflow of foreign investment to the country. GDP of the country, gross capital formation, capital infrastructure, external debt, export and import volume are the major factors that significantly influence foreign capital inflow into the two highly populated, fast growing Asian countries, that is, China and India. In the case of Malaysia, only domestic investment or gross domestic capital formation is significantly related to its FDI inflow.