In the current wave of globalization, Malaysia has become an emerging source of FDI in
the region (see UNCTAD, 2008). Cross-border direct investment by Malaysian firms
could potentially internationalize their business so that home production can be formed as
an integral part of the global supply chain. Can OFDI activities from Malaysia generate
new sources of economic growth given that OFDI can be used as a channel for
globalization of business? In turn, can higher home country economic growth enable
Malaysian firms to undertake cross-border direct investment so that they not only can
take advantage of better opportunities (e.g. low input prices; access to new markets) in
the host countries but also have the propensity to improve their international
competitiveness, which is seen as an important outcome of globalization? This paper
attempts to explore the causal relationships between Malaysia’s OFDI and its economic
growth using the conventional Granger non-causality approach