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What’s Driving Private Investment in Malaysia? Aggregate Trends and Firm-Level Evidence

Author

Listed:
  • Olaf Unteroberdoerster
  • Roberto Pereira Guimarães

Abstract

Private sector investment has been a key source of growth in Malaysia over the last three decades, but after an unprecedented decline in the wake of the Asian crisis it has remained sluggish in recent years. Using aggregate and firm-level data, this paper aims to explain these trends and their implications for Malaysia's investment and growth outlook. Aggregate data point to sustained overinvestment in the years prior to the Asian crisis and the role of shifts in investor perceptions as important determinants of the recent decline in private investment. Meanwhile, firm-level data suggest that low profitability, along with financing constraints affecting smaller firms and those in the services sector, has also been important.

Suggested Citation

  • Olaf Unteroberdoerster & Roberto Pereira Guimarães, 2006. "What’s Driving Private Investment in Malaysia? Aggregate Trends and Firm-Level Evidence," IMF Working Papers 06/190, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:06/190
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Adama Messanh COMBEY, 2016. "The Main Determinants of Private Investments in the WAEMU Zone: The Dynamic Approach," Journal of Economics and Political Economy, KSP Journals, vol. 3(4), pages 731-743, December.
    2. Joong S Kang, 2014. "Balance Sheet Repair and Corporate Investment in Japan," IMF Working Papers 14/141, International Monetary Fund.
    3. Ma, Yiqun, 2015. "Uncertainty and investment: Evidence from the Australian mining industry," Resources Policy, Elsevier, vol. 46(P2), pages 191-201.
    4. James Ang, 2008. "Private Investment And Financial Sector Policies In Developing Countries," Monash Economics Working Papers 07/08, Monash University, Department of Economics.
    5. COMBEY, Adama, 2016. "The Main Determinants of Private Investment in The WAEMU Zone: The Dynamic Approach," MPRA Paper 75382, University Library of Munich, Germany.

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