GROUP PROJECT

Factors Influence The Exchange Rate In Malaysia

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PREPARED FOR:
MR. PUSPAKARAN KESAYAN

PREPARED BY:
NAME

MATRIC NO.

NOOR HAYATI BINTI KHALID

818733

NUR RAFIDAH BINTI MAT MAHIR

820860

FATIN ILYANI BINTI AFIF

820648

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UNIVERSITI UTARA MALAYSIA KUALA LUMPUR (UUM KL)

SEMESTER MAY SESSION 2015/2016
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MARKING SCHEME FOR GROUP PROJECT
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ASSESSMENT

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1
2
3
4
5
TOTAL MARKS

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TABLE OF CONTENT
TABLE OF CONTENT.............................................................................................................ii
CHAPTER 1: INTRODUCTION..............................................................................................2
1.0

INTRODUCTION.................................................................................................2

1.1

BACKGROUND OF STUDY..............................................................................3

1.2

PROBLEM STATEMENT....................................................................................5

1.3

RESEARCH OBJECTIVE....................................................................................6
1.3.1

General Objectives....................................................................................7

1.3.2

Specific objectives....................................................................................7

1.4

RESEARCH QUESTION.....................................................................................7

1.5

SCOPE OF STUDY..............................................................................................7

1.6

SIGNIFICANCE OF STUDY...............................................................................8

1.7

1.6.1

Researcher.................................................................................................8

1.6.2

Future Researcher......................................................................................8

1.6.3

Investor......................................................................................................8

SUMMARY..........................................................................................................8

CHAPTER 2: LITERATURE REVIEW..................................................................................10

2.0

INTRODUCTION...............................................................................................10

2.1

EXCHANGE RATE............................................................................................10

2.2

FOREIGN DIRECT INVESTMENT (FDI)........................................................11

2.3

EXTERNAL DEBT............................................................................................13

2.4

BALANCE OF PAYMENT................................................................................14

2.5

SUMMARY........................................................................................................15

CHAPTER 3: RESEARCH METHODOLOGY.....................................................................16

3.0

INTRODUCTION...............................................................................................16

3.1

DATA COLLECTION.........................................................................................16

3.2

VARIABLES AND MEASUREMENT..............................................................17

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3.3

3.2.1

Dependent Variables................................................................................17

3.2.2

Independent Variables.............................................................................17

RESEARCH DESIGN........................................................................................17
3.3.1

Purpose of the Study...............................................................................17

3.3.2

Sample of study.......................................................................................17

3.3.3

Types of Investigation.............................................................................18

3.3.4

Study Setting...........................................................................................18

3.3.5

Unit of Analysis.......................................................................................18

3.3.6

Time Horizon..........................................................................................18

3.4

THEORETICAL FRAMEWORK......................................................................19

3.5

DATA ANALYSIS...............................................................................................19
3.5.1

Normality Test.........................................................................................19

3.5.2

Descriptive Statistic................................................................................20

3.5.3

Covariance Analysis................................................................................20

3.5.4

Multiple Linear Regression Analysis......................................................20

3.5.4.1 F-test........................................................................................................21
3.5.4.2 T-value.....................................................................................................22
3.5.4.3 Coefficient of Determination (R)...........................................................22
3.5.4.4 Adjusted (R)..........................................................................................22
3.6

HYPOTHESIS STATEMENT............................................................................23

3.7

SUMMARY........................................................................................................24

CHAPTER 4 : FINDINGS AND ANALYSIS.........................................................................25

4.0

INTRODUCTION...............................................................................................25

4.1

NORMALITY TEST..........................................................................................25

4.2

DESCRPTIVE ANALYSIS................................................................................26

4.3

COVARIANCE ANALYSIS...............................................................................27

4.4

MULTIPLE REGRESSION ANALYSIS MODEL............................................28

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CHAPTER 5 : CONCLUSION AND RECOMMENDATION...............................................32

5.0

INTRODUCTION...............................................................................................32

5.1

CONCLUSION...................................................................................................32

5.2

RECOMMENDATION.......................................................................................34

5.4

5.2.1

Change Frequency Of Data.....................................................................34

5.2.2

The Time Period Should Be Longer........................................................34

5.2.3

Research On Other Countries..................................................................34

5.2.4

Add More Macroeconomic And Microeconomic Variables...................34

CONCLUSION...................................................................................................35

REFERENCES.........................................................................................................................36
APPENDICES..........................................................................................................................39
Time Series from year 1984 to 2014............................................................................39
Normality Test..............................................................................................................40
Descriptive Analysis.....................................................................................................40
Covariance Analysis.....................................................................................................41
Multi Regression Analysis...........................................................................................41

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CHAPTER 1: INTRODUCTION
1.0

INTRODUCTION
Transmission of the movements in Exchange Rate (ER) to import prices
and domestic prices is known as exchange rate pass-through. This transmission is
a phenomenon that has affected policy in many ways. It is well-known that the
fluctuations in exchange rates may have a direct impact on price stability,
financial stability as well as trade balance. Specially, the fact that many central
banks have approved inflation targeting strategy in recent decades makes it
necessary to closely follow the linkage between exchange rates and prices.
Furthermore, the literature extended to include emerging market economies since
many developing countries have adopted flexible exchange rate rule along with
inflation targeting strategy for the last two decades.
Exchange Rate (ER) is believed to play important roles for contributing to
the economic growth. The foreign exchange market is one of the biggest markets
in the world which it is estimated about 3.2 trillion USD worth of currency
changes hands every day. Besides that, the price level of the home country
compared to the foreign country and adjusted by the nominal exchange rate is a
key variable in an international macroeconomics. A growing body of literature has
recently focused on exchange rate which it is now commonly recognized that
exchange rate is important to economic development.
Thus, the pattern of development has attracted the researcher to understand
and investigate the relationship of macroeconomics variables which is foreign
direct investment, balance of payment and external debt with exchange rate in
Malaysia. Furthermore, the next chapter will discuss the past studies that had been
done by others researchers with regards to the factors influence the exchange rate
in Malaysia. Moving on to the third chapter, it will explain the data and
methodology used whilst the fourth chapter will analyze and interpret data
analysis. The last chapter will provide conclusion and recommendation of this
research.

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1.1

BACKGROUND OF STUDY
The purpose of this research is to investigate and determine the
relationship of macroeconomics variables towards exchange rate (ER). Several
macroeconomic variables have been chosen such as foreign direct investment,
balance of payment and external debt as the independent variables while exchange
rate (FDI) will be the dependent variable. Exchange rate (ER) is supposed to
contribute to economic growth as the latter may be supported by the expansion of
the volume of investments or by the increase of their efficiency.
The exchange rate is one of the most important determinants of a country's
level of economic growth. It plays an important role in a country's level of trade,
which is crucial to almost every free market economy in the world. It is defined as
the price level of the home country compared to the foreign country and adjusted
by the nominal exchange rate which is a key variable in international
macroeconomics. According to Jeffrey A. Frankel (2008), the exchange rate is the
price of foreign exchange whilst the other sources mention that exchange rates are
determined by demand and supply. However, the governments can influence those
exchange rates in various ways. The level and variety of government involvement
in the currency markets to determine exchange rate system alternatives were
discussed in Rittenberg & Tregarthen, 2013.
The U.S. subprime mortgage crisis is a banking emergency in the country
that triggered the recession in 2008, with the subprime mortgage arrears and
foreclosures, causing a decrease in the value of securities attendant. This is not
surprising given the difficulties that the country has been through during the Asian
financial crisis of 1997/1998, which was mainly due to the activities of hedge
funds, which in turn are subject to currency fluctuations in the extreme. It is worth
reminding ourselves that Malaysia, in a move to curb speculative attacks on the
currency has abolished offshore trading Ringgit Malaysia on 1 September 1998.
In 2008, our Malaysian ringgit exchange rate is RM 3.333 per US dollar. This is
because the U.S. central banks started to inject billions of dollars into financial
markets to ensure that financial markets can continue to operate. Therefore, the
U.S. dollar depreciated due to the large amount of money flowing into the market

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and the purchasing power of money decreased. In 2009, the Malaysian ringgit
exchange rate per U.S. dollar is RM 3.525 for subprime mortgages of the past and
indicated the US economy began to recover. In 2014, the Malaysian ringgit
exchange rate per US dollar is RM3.27 for oil, gas and agriculture.

FIGURE 1 : FLUCTUATION OF EXCHANGE RATE IN MALAYSIA

According to the International Monetary Fund (IMF) foreign direct
investment is the acquisition at least 10% of ordinary share or voting power in
public or private enterprise by non-resident investors. On the other hand, the
United Nation World Investment Report (1999) defined FDI as an investment
which involves the long term relationship reflecting interest and control in one
economy. Foreign direct investment (FDI) should have an impact on the
exchange rate because cost of setting up the revenues from the investment are
denominated in the same currency, but most assume that the real exchange rate is
not constant and it influences the domestic price of FDI and the real value of
revenues transferred to the country. Busse M, Hefeker & Nelgan, 2010 state that,
FDI is a long-term investment and investors should support their decisions about
long-term development of the currencies of short-term expectations of currency
movements. Thus, good FDI will give more benefits to exchange rate and vice
versa.
Besides that, when government borrows, the debt is called public debts.
Public debts are either internal or external, incurred by the government through
borrowing in the domestic and international markets so as to finance domestic

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investment. External debt is one of the factors that influence exchange rate in
Malaysia. External debt is the sovereign borrowing from its own population, from
foreign government or from international institutions (Alam and Taib, 2013).
Public loans are usually made on a national scale by the central government and in
the lower tier of government with provincial / state, regional, district and
municipal administrative authorities. The government took a loan to fill the gap in
the budget when there is deficit in it. This gives more benefits to the exchange rate
and vice versa.
According to Makin (2011), the balance of payment accounts provides a
detailed record of international economic transactions of the economy, and these
accounts are important to understand the level of economic integration with the
rest of the world. The deficit in the balance of payments led to a fall or
depreciation in the exchange rate, while the surplus in the balance of payments
strengthen foreign exchange reserves, resulting in an increase in the price of the
local currency in terms of foreign currency. A balance of payments deficit, which
shows that the demand for foreign exchange exceeded supply. As a result, the
price of foreign currency in terms of domestic currency must be increased. The
exchange rate of the domestic currency may fall. Therefore, both the balance of
payment (BOP) will benefit more to the exchange rate and vice versa.
1.2

PROBLEM STATEMENT
The aim of this research is to investigate the relationship of
macroeconomics variables which are foreign direct investment, balance of
payment and external debt. As economic is growing rapidly, exchange rate
becomes one of important factors that contributes to the economic growth and
maintains the stability of economic performance. Besides that, exchange rate is
one of the most important determinants of a country's economic health. Thus, its
plays a vital role in a country's level of trade which is crucial to almost every free
market economy in the world. Fluctuations of the exchange rate generate
complications in the international market and affect the economies

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According to (Osinubi & Amaghionyeodiwe, 2010), there is a positive

relationship between exchange rate and foreign direct investment (FDI). Exchange
rate movements and foreign direct investment focus on two issues that the level of
the exchange rate and exchange rate fluctuations as noted by Chris Mcintyre 2011.
The positive effects can be justified with the view that foreign direct investment
and exports replace increase in exchange rate fluctuations between the
headquarters and country host promote a multinational company to serve the host
country through local production facilities of export, with the insulation against
currency risks.
Inconsistency, finding from Orji Glorious Onyinye 2012, an exchange rate
does give an effect on balance of payment position and economists. Therefore, the
relationship between exchange rate misalignment and balance of payments
adjustment, there is a need to recall that the exchange rate is the price of one
currency in terms of another, while the balance of payments is the state of affairs
of a country in international trade.
Moreover, according to (Adam and Taib, 2013) said that the external
public debt investigate the relationship with the exchange rate in a debt trap and
the trap is not the national debt. The coefficient of stronger external public debt
and exchange rate shows and loans explosives, stronger demand outside the public
debt, and the heavy use of foreign exchange rates.
1.3

RESEARCH OBJECTIVE
Performance of economic growth in Malaysia represents with some of
determinant factors that probably attract exchange rate such as foreign direct
investment, balance of payment and external debt. All these factors also called as
macroeconomic variables. So, this research aims to investigate and determine the
relationship of macroeconomic variables towards exchange rate. There are two
categorize of research objective which are general objective and specific
objectives.

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1.3.1

GENERAL OBJECTIVES
To investigate whether there is a relationship between selected
macroeconomic variables which foreign direct investment, balance of
payment and external debt on exchange rate in Malaysia.

1.3.2

SPECIFIC OBJECTIVES
i.

To determine the relationship between foreign direct investment

and exchange rate.

ii.

To determine the relationship between balance of payment and

exchange rate.

iii.

To determine the relationship between external debt and exchange

rate.

1.4

RESEARCH QUESTION
The following specific research questions were formulated to help achieve the
objective in this research.
i.

What are the relationships between foreign direct investment and exchange
rate in Malaysia?

ii.

What are the relationships between balance of payment and exchange rate
in Malaysia?

iii.

What are the relationships between external debt and exchange rate in
Malaysia?

1.5

SCOPE OF STUDY
This research only covers microeconomics variables instead of macroeconomic
variables since it is expecting that microeconomic variables have a huge impact on
foreign direct investment. Besides that, the data used in this research covered the
period 1984 to 2014 in Malaysia.

1.6

SIGNIFICANCE OF STUDY
The significance of study is to find out the return after change the regulation from
merit-based to disclosure-based. The return may be bigger or smaller after shift to
disclosure-based. Lastly, this study will help other researcher as their guide in

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order to gain the information regarding the perception and effectiveness of the
learning.
1.6.1

RESEARCHER
This report is very important to the researcher itself. This research will
help the researcher to gain more knowledge and information about factor
that influences the exchange rate in Malaysia. Furthermore, this content of
research from one step to one step would help researchers having a smooth
guideline in their future research.

1.6.2

FUTURE RESEARCHER
This research will be a guideline for the other researchers that have been
similar to the researcher topic. This means that they may use the researcher
thesis as their guidance and improve their study such as adding more
useful information and give an exact data.

1.6.3

INVESTOR
Malaysian exports generally have high import content, and this could help
mitigate the effects of a stronger ringgit on exporters. So, a stronger ringgit
will help to reduce production costs and help exporters maintain price
competitiveness. However, it is different to the imports of goods, as
domestic demand slowed due to the depreciation of the ringgit. Hence, this
study is important to the investors to know the factor influencing
fluctuation in currency exchange in Malaysia.

1.7

SUMMARY
As mentioned above, exchange rate plays an important role to ensure the
continuing of stability in economic growth. Thus, failure to manage exchange rate
flows to country definitely will affect performance of the economic performance.
Several macroeconomics factors like foreign direct investment, balance of
payment and external debt might have a relationship with exchange rate. This
research will investigate and discover the relationship between these factors
whether there is any significant correlation between dependent and independent
variables.

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CHAPTER 2: LITERATURE REVIEW

2.0

INTRODUCTION
These chapters explain literature review where it focuses on reviewing the past
journal and article that has been done by other researcher relating to the same
topic as in this research. The main purpose of this research is to investigate the
relationship between selected macroeconomic variables which are foreign direct
investment, balance of payment and external debt on exchange rate. It is important
to review past journals and articles as a reference in order to be guidelines to start
this research. Thus, the function of literature review is to broaden researcher
knowledge base in research area and can compare the result of findings of this
research with the previous research. The previous researches are as follows:

2.1

EXCHANGE RATE
The real exchange rate is the price level in the country of origin, as
compared with foreign countries and coordinated by the nominal exchange rate, is
key variables in international macroeconomics. One of the facts that are widely
recognized and well established in the international financial styled is the change
in the real exchange rate tends to be continuous and real exchange rate following
the process time series estimated by unit-root process is not moving (Yan, 2014).
Meanwhile, in other resources determine that the exchange rate is
determined by supply and demand. But the government can influence their
exchange rates in a variety of ways. The level and type of government
involvement in the currency markets to determine exchange rate alternative
system (Rittenberg Tregarthen 2013)
In addition, there are three broad categories exchange rate system. There is
a free-floating exchange rate system, the managed float system, and a system of
fixed exchange rates. In one system, which is a free floating exchange rate system,
it has been established solely by the power of the private market without

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government involvement. The values are constantly changing as the demand and
supply of currency fluctuations. Although, in a managed float system and the
system of fixed exchange rates, the currency is allowed to change, but the
government took part in the currency market in order to affect values. Finally, the
government can try to set the values of their currencies, either through the market
or through participation in regulatory policy.
Moreover, since the exchange rate is the relative price of a country's
currency in terms of another national currency, it is natural to think that the
exchange rate is determined, at least approximately, the outstanding stock of
money and the demand to hold these shares (Mussa, 2010). In other sources, it
describes the determination of the nominal exchange rate to recognize the
influence of international trade and payments, speculation and hedging activities.
In the traditional model, the force of supply and demand for foreign exchange
plays an important role in determining the balance that appears in the equation of
supply and demand for foreign exchange (Ogun, 2012).
2.2

FOREIGN DIRECT INVESTMENT (FDI)

Foreign direct investment (FDI) refers to "direct investment into
production or business in the country with a company in another country"
expressed by (Fazidah, 2002). Therefore, Nur Suhaili, Zarina and Independent
state that Malaysia is among the countries in Asia that have benefited from the
inflow of foreign investment firm. It is also supported by Hooi (2008) is an
undeniable role that foreign investment has played in economic growth as it is an
important factor in the economy is growing and Malaysia will progressively adopt
a more focused approach in measures to attract many more foreign direct
investment. To add, foreign direct investment, by definition, is a long-term
investment and therefore investors should base their decisions on currency longterm development of short-term expectations about currency movements
(Busse.M, Hefeker, & Nelson, 2010)
There are exchange rate movements and exchange rate uncertainty
investors seem important factor to take into account in making the decision to

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invest abroad. Usually exchange rate movements and foreign direct investment
focus on two issues that the level of the exchange rate and exchange rate
fluctuations. So, it shows that there is a positive relationship between exchange
rate and foreign direct investment (Osinubi & Amaghionyeodiwe, 2010).
In addition, the level of exchange rates can affect foreign direct
investment. This is due to the depreciation of the national currency against the
host local currency increases the relative wealth of foreigners to increase the
attractiveness of the host country for foreign direct investment as the company
may acquire assets in the host country is relatively low. Therefore, the
depreciation of the home currency should increase foreign direct investment of the
host country, and vice versa appreciation of the currency will decline host of
foreign direct investment.
Although, exchange rate fluctuations explain that according to the
flexibility of production, exchange rate fluctuations increase foreign investment
because firms can adjust the use of a variable factor of them. Furthermore,
Osinubi, Amaghionyeodiwe (2010) state that it is a positive correlation between
actual inflows of foreign direct investment and the exchange rate. Positive effects
can be justified with the view that foreign direct investment and exports replace
increase in exchange rate fluctuations between the headquarters and the host
country prompted a multinational company to serve the host country through local
production facilities of export, with the insulation against currency risks ( Osinubi
& Amaghionyeodiwe, 2010).
Also, the results show that structural adjustment programs have a negative
impact on foreign direct investment real entry, which may be caused by
deregulation, accompanied by exchange rate fluctuations. Direct investment in
countries with a high level of exchange rate fluctuations will have a higher risk of
profit.
In addition, according to the theory of risk aversion, FDI decreases as the
exchange rate fluctuations increased. This is because of the higher volatility in the

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exchange rate lowers the exchange rate expectations certainty equivalent (Osinubi
& Amaghionyeodiwe, 2010).
Furthermore, the relationship between FDI and real exchange rate
combined two alternative theories that FDI flows are sensitive to movements in
the real exchange rate through the legs and steins imperfect capital markets
hypothesis. The second approach is more traditional and suggests FDI could be
affected by changes in the relative value and relative wages. It showed that there
was a significant relationship between FDI, exchange rates and the net from time
to time (Ihrig & Mcintyre, 2011).
2.3

EXTERNAL DEBT
Alam and Taib (2013) defined as the external debt, the sovereign debt of
its own population, of foreign governments or international institutions. Public
loans are usually made on a national scale by the central government and in the
lower levels of government by regional, state, provincial, regional and municipal
administrative authorities. The government took a loan to fill the gap in the budget
when deficit in it.
Based on foreign exchange risk management foreign debt, completion of
economic issues related to the allocation of foreign currency debt depends on the
currency structure of foreign debt that determines the relative magnitude of
exchange rate differences in respect of foreign currency related, and the
covariance of the nominal exchange rate with major domestic balance. This is due
to the inability to predict the basics of exchange rates and high levels of sound are
incorporated in the exchange rate (Melecky, 2010).
In addition, Trails and Taib (2013) investigated the relationship between
external public debt with the exchange rate in the debt trap and not a debt trap.
The findings show that there is a positive correlation of external public debt and
exchange rates. However, the strength of the relationship between the exchange
rate and the external public debt of the different countries of the debt-trap and
countries not debt trap. Coefficient strong external public debt and exchange rate

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shows and loans explosives, stronger demand outside the public debt, and heavy
use of foreign exchange (Alam & Taib, 2013).

2.4

BALANCE OF PAYMENT
According to Makin (2011), the balance of payments accounts provide a
detailed record of international economic transactions of any economy, and these
accounts are important to understand the level of economic integration with the
rest of the world.
In addition, Makin (2011) emphasizes that the capital account and the
current account balance related to commercial transactions, it is the same as the
exchange rate plays an important role in international trade and investment as they
affect the price of goods and services traded international. The exchange rate is
the price of one currency in terms of another. Exchange rate movements show the
economic impact of all the changes in trade flows, global commodity prices, and
capital flows between the economy highly integrated, both with each other and
with global financial markets were good, service, and. So, there is a positive
relationship between the exchange rate and balance of payments. The authors
conducted a study at the University of Queensland, Australia (Makin, 2011).
In addition, the exchange rate refers to the price of the currency. The
importance of the exchange rate is derived from the fact that it connects the two
pricing systems are different countries making it possible for international trade to
make a direct comparison of the goods traded. In other words, they link domestic
prices with international prices. Through its impact on the volume of imports and
exports, exchange rate imposes a positive influence on the country's balance of
payments position. Therefore, the countries in the pursuit of macroeconomic
objectives healthy external balances as shown in their balance of payments
position, it is important to enunciate the exchange rate policy (Oladipupo &
Onotaniyohuwo, 2011).
The exchange rate has no effect on the balance of payments and economic
experts. Therefore, the relationship between exchange rate misalignment and

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balance of payments adjustment, there is a need to recall that the exchange rate is
the price of one currency in terms of another, while the balance of payments is the
state of affairs of a country in international trade. Therefore, there is relationship
because they cannot be traded internationally if the national currency worthless in
another country to allow trade in boarder. So, it is a positive relationship between
exchange rate misalignment and balance of payments adjustment (David Umoru
& Odjegba 2013)
Finally, the deficit in the balance of payments led to a fall or depreciation
in the exchange rate, while the surplus in the balance of payments strengthen
foreign exchange reserves, resulting in an increase in the price of the local
currency in terms of foreign currency. A balance of payments deficit, which shows
that the demand for foreign exchange exceeded supply. As a result, the price of
foreign currency in terms of domestic currency must rise and the exchange rate of
the domestic currency may fall. On the other hand, the surplus in the balance of
payments implies a greater demand for local currency in the foreign country of the
available supply. As a result, the price of the local currency in terms of foreign
currency exchange rates increased and improved.
2.5

SUMMARY
In this chapter, after reading previous paper done by other researchers hence
above are literature review ether empirical or theoretical and selected
macroeconomics have been identified to be used in this research that is foreign
exchange rate, balance of payment and external debt towards exchange rate. In
general, the above literature as an evidence that the selected macroeconomic
variables have an impact towards exchange rate. Therefore, this research is to
investigate the relationship of selected macroeconomic variables on exchange rate
in Malaysia. To achieve the objective of this research, research methodology will
be presented in next chapter.

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CHAPTER 3: RESEARCH METHODOLOGY

3.0

INTRODUCTION
Previously, literature review chapter have discussed all the result and findings of
selected macroeconomics variables on exchange rate that has been done by other
researcher. Beside, chapter one have clearly outline research objectives and
research questions thus in order to support research objectives and research
questions, so in this chapter, research will focus and explain on the sampling plan
where the tools will be used to create data to make sure that information that has
been collected will be generate in an appropriate way even not excessive.

3.1

DATA COLLECTION
This research collected the data from secondary data. Secondary data means that
the data available is collected from someone else records. The good thing about
secondary data which its helped researchers to analyze the data and
understanding so can define problem, formulate research design and interpret the
results. Then, all data are gathered from various types of journals, articles and
internet sources. Data collection for exchange rate, foreign direct investment,
balance of payment and external debt are obtains from time series in a yearly basis
and total observation are 31 years of from year 1984 to 2014.

Variables

Proxy

Units

Sources of data

Exchange Rate

ER

RM

World Bank

Foreign Direct
Investment

FDI

RM

World Bank

Balance of
Payment

BOP

RM

World Bank

External Debt

ED

RM

World Bank

Table 3.1: Sources of Data

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3.2

VARIABLES AND MEASUREMENT

In this research will be used two types of variables which are dependent variable
and independent variables.
3.2.1

DEPENDENT VARIABLES

The dependent variable is signified as variable of primary interest to the

researcher as it provides a measurement of the effect of the independent variables.
The dependent variable for this study is the Exchange Rate (ER).
3.2.2

INDEPENDENT VARIABLES

There are four independent variables will be used in this study which are foreign
direct investment, balance of payment and external debt. For information,
independent variables also known as forecaster variables means that all the
variables stated are the ones that influence the dependent variable and they explain
the inconsistency in dependent variable.
3.3

RESEARCH DESIGN
The purpose of research design is to discover and examine relationship between
exchange rate and selected macroeconomic variables. Hypothesis will be
conducted in this research to explain significant correlations between dependent
and independent variables.
3.3.1

PURPOSE OF THE STUDY

The purpose of this study is to investigate, analyze and evaluate the performance
of exchange rate, whether it can be affected by selected macroeconomics variables
or not. This research will help companies and business and even investor to
understanding the pattern of foreign direct investment in this country.
3.3.2

SAMPLE OF STUDY

This study used exchange rate in Malaysia and it is 31 yearly basis data for the
year 1984-2014. These samples act as an indicator in order to examine the

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significant relationship between exchange rate and macroeconomic variable which

are foreign direct investment, balance of payment and external debt.
3.3.3

TYPES OF INVESTIGATION

In this research, multiple regression analysis through E-views7 will be used to

know whether there is a significant relationship between dependent variables and
independent variables. It indicates that one variable will causes a change in other
variables.
3.3.4

STUDY SETTING

All the data was collected from World Bank from 1984 to 2014 and it is based on
secondary data. To add, this research carried out on a non-contrived setting that is
in the natural environment where work proceeds normally which is Malaysia.
3.3.5

UNIT OF ANALYSIS

Unit analysis consist of two which dependent variables and independent variables.
Independent variables for this research refer to macroeconomics variables. As
mentioned, exchange rate will be used as dependent variable while foreign direct
investment, balance of payment and external debt in this research act as
macroeconomic variables. All these factors will be analyzed to determine whether
these factors may influence the level of exchange rate.
3.3.6

TIME HORIZON

In order to make data collected is stable and achieve researchs objective, longer
period of time is used in research. The frequency of the data is based on yearly
basis from year 1984 to 2014 and total observations are 31 years.

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3.4

THEORETICAL FRAMEWORK
Diagram below shows the relationship between dependent variable and
independent variables. Independent variables are foreign direct investment,
balance of payment and external debt. Meanwhile, dependent variable for this
research is exchange rate.
Foreign Direct Investment
Exchange
Rate

External debt
Balance of Payment
Independent variable (IV)

Dependent variable (DV)

Figure 3.1: The factor influences the exchange rate in Malaysia.

3.5

DATA ANALYSIS
To determine whether there is significant relationship between dependent
variables (exchange rate) and independent variables (foreign direct investment,
balance of payment and external debt), thus the data in this research will be
analyzed using Eviews7s software. This research will be using multiple
regressions with time series data. There are steps when analyzing time series data
by using multiple regressions including:
1.

Check on the assumptions using Normality Test

2.

Perform Descriptive Statistic

3.

Perform Covariance Analysis

4.

Perform Multiple Regression Analysis

3.5.1

NORMALITY TEST

In this research, normality test is using for test on normality of error term. Here in
this method, it is to check whether error term is normally distributed. Probability
of Jacque-Bera (J-B) will be used as to know whether an error term is normally
distributed. If p-value of Jacque-Bera showing value above 5% at significant level

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means that we fail to reject null hypothesis at 5% significance level as conclusion

error term is normally distributed. The hypotheses are as follow:
H01 : Error term is normally distributed
HA1: Error term is not normally distributed
3.5.2

DESCRIPTIVE STATISTIC

Descriptive statistic provides simple summaries about the sample and measure.
Descriptive statistic will explain mean, median, standard deviation, skewness and
kurtosis. To generate, this research will used the data from 1984 to 2014 time
series basis. The dependent variables will be exchange rate and independent
variables which are foreign direct investment, balance of payment and external
debt. Therefore, descriptive statistic enables to present the data in a more
meaningful way, which allows simpler interpretation of the data.
3.5.3

COVARIANCE ANALYSIS

In this research, covariance analysis will be used to know whether there is

correlation or linear relationship between selected macroeconomic variables on
exchange rate. The purpose of testing by using covariance analysis, it will observe
the p-value of t-statistic between dependent and independent variables. If p-value
is less than 5% significance level, means failed to reject alternate hypothesis
hence the correlation are exist between two variables which is independent
variables (market size, exchange rate, inflation rate and interest rate) and
dependent variables (foreign direct investment). The two related hypothesis here
regarding to the correlation between two variables are:
H01 : There is no correlation
HA1: There is correlation
3.5.4

MULTIPLE LINEAR REGRESSION ANALYSIS

Multiple linear regressions are one type of complex associational statistical

method.This technique of regression is commonly used in business and economics
for testing the relationship between the dependent and independent variables. The
correlation analysis should be applied to obtain a measurement of the degree of
association or correlation between the two variables. The Multiple Regression is a
statistical tool to measure the type of relationship exists between two or more

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variables. The relationship is expressed in a mathematical equation, which gives

the basis of estimating the values of a dependent variable based on the values of
an independent variable.
The model derived from the Multiple Linear Regression Model analysis is as
follow:
Y= 0+ log1x1+ log2x2+ log3x3+ log4x4+
Where:
Y

= Exchange rate in Malaysia

= Constant

1, 2, 3, 4

= Coefficient to be estimated

x1

= Balance of payment

x2

= External debt

x4

= Foreign direct investment (FDI)

= Error
3.5.4.1 F-TEST
To measure overall fitness of the model or overall significance hence Ftest will be using in this research. F-test will be used and it provides an
indication whether any of the independent variables is useful in explaining
the variance of the dependent variable. When p-value of F-Statistic is more
than 5% significance level, it can conclude that the null hypothesis is
accepted and when p-value is less than 5% significance level meaning that
we will reject null hypothesis and as conclusion, at least one of
independent variables is important in explaining the dependent variable.
The hypotheses here are as follow:
H01: No independent variable affects the dependent variable.
HA1: At least one independent variable affects the dependent
variable.

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3.5.4.2 T-VALUE
T-value is applied to test hypothesis statements whether the null
hypotheses can be accepted or rejected. The table of significance level as
shown below:
Significant
Level

Level of
Confident

P-Value

Decision

Sign

1% significant
level

99% level of
confidence

P-value < 0.01

Reject null
hypothesis

***

5% significant
level

95% level of
confidence

P-value < 0.05

Reject null
hypothesis

**

10%
significant
level

90% level of
confidence

P-Value < 0.10

Reject null
hypothesis

Table 3.2 Sign of T-Value

3.5.4.3 COEFFICIENT OF DETERMINATION (R)
R is also known as coefficient of determination. It is used to determine
how good the regression fits the data. In general, the higher the R-squared,
the better the model fits the data. Generally, R equal to 1 means the
regression fit the data perfectly and R equal 0 mean the regression is no
better than guessing the sample mean (Richard Startz,2007). In other
words, if R show the value of 1 it indicates strong correlation between
dependent and independent variables.
3.5.4.4

ADJUSTED (R)

Adjusted (R) is a summarization the fit as it takes into the number of the
variables in the model. It is used to compares the explanatory power of
regression models that contain different numbers of predictors. The value
of adjusted (R) can be negative and it is usually lower than the value of
(R). Negative value can occur when the model contain term that do not
help to predict the respond. The adjusted (R) subtracts a small penalty for
each additional variable added (Richard Startz, 2007).

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3.6

HYPOTHESIS STATEMENT
Hypothesis testing is a statistical method in making decision by using data
whether in a controlled experiment or observational study. Hypothesis testing
consists of two hypothesis which called the null hypothesis (H0) and alternative
hypothesis (HA1). The main objective of the hypothesis testing is to determine
whether there is enough evidence to reject the null hypothesis.
In order to determine there is any significant relationship between the
independent variables which areforeign direct investment, balance of payment and
external debton dependent variables which is exchange rate then hypothesis need
to conduct. The hypotheses will be test in this research as below:
Hypothesis 1
H01: There is no relationship between foreign direct investments on the exchange
rate.
HA1: There is a significant relationship between foreign direct investments on the
exchange rate.
Hypothesis 2
H02: There is no relationship between balances of payment on the exchange rate.
HA2: There is a significant relationship between balances of payment on the
exchange rate.
Hypothesis 3
H03: There is no relationship between external debts on the exchange rate.
HA3: There is a significant relationship between external debts on the exchange
rate.

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3.7

SUMMARY
This research is aim to investigate the relationship between foreign direct
investment on exchange rate, the relationship of balance of payment on exchange
rate, the relationship of external debt on exchange rate. To achieve this objective
hence this chapter provides clearly details about research design as how the
research is conduct and what will be applied in this research.
Furthermore, 31 years from 1984 to 2014 based on yearly basis and time
series will be used in this research. All data has been collected from World
Development Indicator through World Bank. The data that has been collected will
be generate using Eviews7 and going through various test to determine the
relationship between independent variables and dependent variables. The test
including Normality Test, Descriptive Statistic, Covariance Analysis and Multiple
Regression Analysis. Next chapter will be expecting that the result answering the
hypothesis statement to achieve the objective of this research.

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CHAPTER 4 : FINDINGS AND ANALYSIS

4.0

INTRODUCTION
In chapter three, these papers have clearly explained the methodology that been
used to achieved the purposed of this research where to determine and investigate
the relationship of macroeconomic variables towards exchange rate. Thus, in this
chapter four, this paper will explain and interpret the result of the data and analyze
it. Microsoft excels and Eview7 have been used to get the result of the data. It
includes the result of Normality Test, Descriptive Statistic, Covariance Analysis
and Multiple Regression Analysis. In the end, finding and analysis of this paper
will be presented to give clear picture regarding to the relationship of
macroeconomic variables on exchange rate.

4.1

NORMALITY TEST

Figure 4.1 Normality Test

Figure 4.4 shows Normality Test to check normality of error term, based on
probability of Jacque-Bera as in the Figure 4.4 above. As stated previously in
Chapter 3, if p-value of Jacque-Bera showing above at 5 percent significant level
means that it is fail to reject null hypothesis (where, H01 ; Error term is normally
distributed), therefore it gives a meaning that, error term is normally distributed.
Hence, Jacque-Bera stated 1.961379 and p-value is 0.375052 where p-value

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showing above 5 percent significant level so the data collected is normally

distributed gives a sign that the regression is good.
4.2

DESCRPTIVE ANALYSIS

ER

FDI

BOP

ED

Mean

3.114194

9.441303

7.340653

9.425092

Median

3.090000

9.593816

7.301898

9.446744

Maximum

3.920000

10.17953

7.942752

9.691617

Minimum

2.340000

8.059429

6.862131

8.942121

Std. Dev.

0.536419

0.503271

0.268337

0.168130

Skewness

0.162048

-0.839721

0.293160

-0.928766

Kurtosis

1.447414

3.137992

2.326845

3.922591

31

31

31

31

Observations

TABLE 4.1: TABLE DESCRIPTIVE ANALYSIS

The table shows Descriptive Analysis for all variables which are Exchange
Rate (ER), Foreign Direct Investment (FDI), Balance of Payment (BOP) and
External Debt (ED) within 30 years from 1984 until 2014(yearly). The finding
shows that exchange rate has a positive mean and median with 3.114194 and
3.090000 respectively. For the maximum ratio is 3.92 percent while the minimum
ratio is 2.34 percent over the period. The standard deviation will be used to
measure the risk. As shown in table 4.1, exchange rate having standard deviation
of 0.536419. Furthermore, skewness and Jarque-Bera for exchange rate showed
positive 0.162048 meaning that it has positively skewed and 3.249268 for
distribution of data.
For the independent variables, the result for FDI, BOP and ED has a
positive mean. The highest mean is foreign direct investment which is 9.441303
followed by external debt with 9.425092 and the lowest mean is balance of
payment with 7.340653. Also median for all macroeconomics variables are
showing positive result which is good.

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Furthermore, the maximum ratio over the period of 1984 to 2014 showing
that FDI with 10.17953 percent while minimum ratio shows by BOP with
6.892131 percent. Then, the higher standard deviation is to measure the risk
within the entire variable which has the higher volatile between variables. The
higher standard deviation is FDI with 0.503271 while the lower is ED with
0.168130.
Moreover, for skewness and kurtosis gives a meaning that, acceptable
range of skewness is below 3.00 and for kurtosis is below 8.00. Refer to the value
for all macroeconomics variables, it show that FDI, BOP and ED are acceptable
range where the results still below 3.00. The data will consider as problematic if
the result below 8.00 and the value that closer to zero is better.
4.3

COVARIANCE ANALYSIS
ER
1.000000
---------------

FDI

FDI

0.137461
0.747346
0.4609

1.000000
-------------

BOP

-0.276307
-1.548230
0.1324

-0.039143
-0.210954
0.8344

ED

0.622507
0.438898
-0.023566
4.283462
2.630429
-0.126940
0.0002
0.0135
0.8999
Table 4.3 : Covariance Analysis

ER

BOP

ED

1.000000
-------------1.000000
-------------

Covariance Analysis is performing to check whether there is correlation

between independent variables and dependent variables based on p-value of tstatistic. While correlation coefficient is a way to determine how related between
the two variables. The advantage of correlation coefficient is the researcher can
make a estimation based on the result of correlation analysis.

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From the above Table 4.2, the findings show that external debt (ED) has a
strong correlation 0.622507 with exchange rate (ER). Hence, for foreign direct
investment (FDI) 0.137461 and balance of payment (BOP) -0.276307, the result
shows that there are lower correlations with exchange rate (ER).
Besides, the probability for external debt (ED) is 0.0002 means that failed
to reject alternate hypothesis at 5 percent significance level thus there is
correlation between exchange rate (ED) and external debt (ED). Whereas for the
foreign direct investment (FDI) is 0.4609 and balance of payment (BOP) is 0.1324
are not significance compare to external debt (ED).
For summarization, external debt (ED) has correlation between exchange
rate (ER) in contrast foreign direct investment (FDI) and balance of payment
(BOP) does not have any correlation with exchange rate (ER).
4.4

MULTIPLE REGRESSION ANALYSIS MODEL

For this Multiple Regression Analysis, it is included 31 observation total with time
series data has been used and applied to get the result of the data as shown in the
Table 4.3 below:
Variables
C
FDI
BOP
ED
R-squared
Adjusted R-squared
F-statistic
Durbin Watson
Total Observation

Coefficient
-12.05622
-0.189368
-0.533550
2.214822

t-Statistic
-2.565094
-1.151360
-1.924422
4.500894
0.481465
0.423850
8.356588
0.713127
31

P-Value
0.0162
0.2597
0.0649*
0.0001***

Notes: *** Significant at 1% level ** Significant at 5% level * Significant at 10% level

Table 4.4 : Multiple Regression Analysis

The equation of Multiple Regression Analysis as follows:
Y= 0+ log1x1+ log2x2+ log3x3+ log4x4+

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Where:
Y

= Exchange rate in Malaysia

= Constant

1, 2, 3, 4

= Coefficient to be estimated

x1

= Balance of payment

x2

= External debt

x4

= Foreign direct investment (FDI)

= Error
From the above Table 4.3, the findings show that external debt (ED) has a

positive coefficient on exchange rate (ER). Hence, an increase in ED by 1 percent

will increase ER by 2.214822 percent. Meanwhile, FDI and BOP has negative
coefficient on ER with an increase in FDI and ED by 1 percent will decrease FDI
by 0.189368 percent and 0.533550 percent and vice versa.
In this Multiple Regressions Analysis, ED and BOP have positive
significant level 1 percent and 10 percent respectively with p-value 0.0001 and
0.0649 respectively. Significant coefficient means that, any changes either
increase or decrease in ED and BOP will affect ER.
External debts shows significant positive side of exchange rate and it is
significant. Thus, external debt depicts result with the finding by Alam and Taib
(2013) investigate the relationship of external public debt with exchange rate in
debt trap and non-debt trap countries. The finding showed that there is positive
relationship of external public debt and exchange rate. Additionally, its strength of
relationship between exchange rate and external public debt varies in debt-trap
countries and non-debt trap countries. A stronger coefficient of external public
debt and exchange rate indicate and explosive borrowing, a higher demand of
external public debt, and heavy utilization of foreign exchange
Furthermore, BOP also show positive significant at 10 percent level. Refer
to Orji Glorious Onyinye (2012) exposed that there exist a positive and a
statistically insignificant relationship between foreign exchange rate and balance
of payment. This is because of it is a deliberate measure of shifting the exercise

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rate against the have currency. Hence, the reason for devaluation in exchange rate
is that the increase in import prices would reduce import bill while the exports will
increase value because of a fall in their prices and a greater increase in export
volume. In other words imports become less attractive because they become more
expensive in the terms of the domestic currency. It is a known measure of
correcting disequilibrium in a deficit balance of payments. They are different
approaches adopted in discussing devaluation two of such approaches are the
elastics approach and the absorption approach.
Besides, FDI show that it not significant at any level with p value of
0.2597 respectively. Insignificant coefficient means that any changes in FDI will
not affect ER. Based on the finding that getting from the analysis it shows the
foreign direct investment is not significant which mean foreign direct investment
not influencing the fluctuation of exchange rate. The result is supported by Bruce
A. Blonigen (2006) state base on empirical studies of FDI seemed to conform this,
often finding insignificant effects of exchange rate. Next, refer on Matthias Busse
and Carsten Hefeker (2010) state that impact of a fixed-exchange rate regime on
FDI is still negative and not significant when considering only middle-income
countries.
Referring to the table, the results show that R-squared was 0.481465. It
means that R-squared are closed to 1 and shows the strong correlation between
dependent variable (exchange rate) and independent variable (balance of payment,
external debt, economic growth and foreign direct investment). R-squared indicate
458.14 percent of the variations in exchange rate were explained by independent
variable and another 51.86 percent cannot be explained by these variables but may
be can be explained by other factors or variables not included in this model.
Furthermore, Table 4.3 above presents the value of F-Statistic and the
probabilities value of F-Statistic for the Multiple Regression Model. The p-value
of F-Statistic shows 0.000432 where it is at 1 percent significant level with 99
percent confident level. Therefore, the results indicate that meaning that we will
reject null hypothesis and as conclusion, at least one of independent variables used
in this research affects the dependent variable which is exchange rate.

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CHAPTER 5 : CONCLUSION AND RECOMMENDATION

5.0

INTRODUCTION
Previous chapter clearly explained all the findings that have been tested by using
selected model. Thus, in this chapter, it will make a conclusion from all the
findings as discussed in data analysis and treatment. Also, this research will
provide recommendation that can be benefit by others parties or researcher in
order to gain knowledge regarding to this topic that can help to improve future
research.

5.1

CONCLUSION
In this study, the researcher examines factors influencing exchange rate in
Malaysia. Several variables are incorporated which are balance of payment,
external debt, and foreign direct investment to explain the exchange rate.Thus, the
objective of this study is to determine relationship between possible dependent
and independent variables. Factor influence exchange rate in Malaysia was chosen
as dependent variable. The balance of payment, external debt, and foreign direct
investment served as the independent variables in this study.
Based on the finding, it can be conclude that external debt and balance of
paymentare the factors that can influence exchange rate in Malaysia. From this
result, it shows that there are significant relationships between the variables. In
addition, the foreign direct investment has insignificant relationship between the
exchange rate.
First, it is not essential that the balance of payments is a factor to influence
the exchange rate in Malaysia. Thus the results of the findings are consistent with
economic theory. This decision was supported by Orji Glorious Onyinye (2012)
found that there exists a positive correlation was not statistically significant
between the exchange rate and balance of payments. This is because it is a
measure of the rate of accidental switching of exercise on the currency. The reason

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for the devaluation of the exchange rate is that higher import prices will reduce the
import bill, while exports will increase in value due to the fall in prices and a
larger increase in export volumes. In other words, imports become less attractive
because they become more expensive in local currency terms. It is a measure
known correct imbalances in the balance of payments deficit. They are different
approaches adopted in the deliberate devaluation of the two approaches is the
elastics approach and absorption approach.
For the second independent variable which is external debts, it shows
significant positive side of exchange rate and it is significant. Therefore this study
should accept H1 and reject H0. External debt depicts result with the finding by
Alam and Taib (2013) investigate the relationship of external public debt with
exchange rate in debt trap and non-debt trap countries. The finding showed that
there is positive relationship of external public debt and exchange rate. Moreover,
its strength of relationship between exchange rate and external public debt varies
in debt-trap countries and non-debt trap countries. A stronger coefficient of
external public debt and exchange rate indicate and explosive borrowing, a higher
demand of external public debt, and heavy utilization of foreign exchange
Besides, based on the finding that getting from the analysis it shows the
foreign direct investment is not significant which mean foreign direct investment
not influencing the fluctuation of exchange rate. The result is supported by Bruce
A. Blonigen (2006) stated based on empirical studies of FDI seemed to conform
this, often finding insignificant effects of exchange rate. Next, based on Matthias
Busse and Carsten Hefeker (2010) state that impact of a fixed-exchange rate
regime on FDI is still negative and not significant when considering only middleincome countries. In addition, in this study the researcher use the total foreign
direct investment in the countries.
In conclusion, according to the finding and the analysis from the other
researcher the study that was conducted shows that foreign direct investment is
not the factor which affectsthe exchange rate, while external debt and balance of
payment are the factor of exchange rate.

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5.2

RECOMMENDATION
5.2.1

CHANGE FREQUENCY OF DATA.

As in this research, time series basis have been used to test data on selected model
but in future research, researcher can change datas frequency such as monthly
and quarterly. It is because, whenever researcher using different frequency of data
from others thus it will test the consistency of the findings and the reliability of
study will be increase.
5.2.2

THE TIME PERIOD SHOULD BE LONGER

In order to get better findings as compare to this research, longer period of data is
recommended. Many previous researchers are recommended to have 40 years and
more as an observation. Thus, it helps to improve the findings and the data will be
more accurate.
5.2.3

RESEARCH ON OTHER COUNTRIES

Another research with the same broad area can be conducted using different
countries as it will expand the knowledge and trend of exchange rate where
different countries will shows different level of exchange rate. Besides, addition of
the research by choosing different countries instead of Malaysia, the information
obtained would be very useful and valuable to others or third parties to gain more
knowledge on exchange rate.
5.2.4

ADD MORE MACROECONOMIC AND MICROECONOMIC VARIABLES

In this research, adjusted of R-squared showing 48.14 percent have been explain
by selected microeconomics variables which are foreign direct investment,
balance of payment and external debt. However, the balance of 51.86 percent can
be explain by adding another microeconomic variables and even can includes
macroeconomic variables such as economic growth, inflation rate and etc. This
addition of macroeconomic and microeconomic variables can improve data
findings to be more accurate and lead to have a good regression analysis.

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5.4

CONCLUSION
The aim of this research has been achieved where it is to investigate and
determine the relationship of selected macroeconomic variables which are foreign
direct investment (FDI), balance of payment (BOP) and external debt (ED) on
exchange rate (ER). Based on the findings in chapter (4) four, it was found that
external debt has significant positive relationship and balance of payment has a
significant negative relationship on exchange rate where any changes increasing
or decreasing in ED and BOP will totally influence level of exchange rate. In
contrast, other variable such as FDI does not have any significant relationship
with exchange rate. Thus, to improve the findings for future research, this chapter
has clearly discussed some recommendations that can be taken in order to improve
the flows of the research and also to obtained accurate data and result.

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Economy.
David Umoru, P., &Odjegba, O. P. (2013).Exchange Rate Misalignment And Balance Of
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Gadaneez, B., &Mehrotran, A. (2012).The Exchange Rate, Real Economy And Financial
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Gnimassoun, B., & Mignon, V. (September 29, 2013). Current-Account Adjustments And
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Ihrig, J., &Mcintyre, K. (2011). Foreign Direct Investment And The Real Exchange Rate:
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Lavelle, P. (Mon 6th August 2012). How Does National Debt Affect Foreign Exchange
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Lily, J. (2012). The Effect Of Exchange Rates On Economic Growth: Empirical On
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Makin, A. J. (2011). The Balance Of Payment And The Exchange Rate. International
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APPENDICES
TIME SERIES FROM YEAR 1984 TO 2014
YEAR

ER

FDI

BOP

ED

1984

2.34

8.901718091

7.219322508

8.942121203

1985

2.48

8.841805092

6.953759692

9.065805206

1986

2.58

8.689197039

7.94275192

9.161275742

1987

2.52

8.626011401

7.449940989

9.287301107

1988

2.62

8.85698133

7.287577809

9.284036419

1989

2.71

9.222162606

7.359076226

9.24301472

1990

2.7

9.367813327

7.621176282

9.349167725

1991

2.75

9.601891509

7.66029616

9.405094386

1992

2.55

9.714611213

7.691700208

9.415493355

1993

2.57

9.699459852

7.770999205

9.449090215

1994

2.62

9.637669906

7.558828525

9.521872754

1995

2.5

9.620993313

7.045714059

9.562580593

1996

2.52

9.705728183

6.862131379

9.406217831

1997

2.81

9.710668525

7.099335278

9.308098925

1998

3.92

9.33513719

7.322012439

9.36795234

1999

3.8

9.590536803

7.104145551

9.436988294

2000

3.8

9.578367729

6.952792443

9.468182149

2001

3.8

8.743468504

7.065579715

9.501830853

2002

3.8

9.505614025

7.097951071

9.509602615

2003

3.8

9.393251844

7.153814864

9.546738669

2004

3.8

9.665037598

7.368472838

9.638971705

2005

3.79

9.593816052

7.301897717

9.648624313

2006

3.67

9.885967635

7.215901813

9.691617086

2007

3.44

9.957672873

7.208172527

9.514245899

2008

3.34

9.879239995

7.258876629

9.63227402

2009

3.52

8.059428734

7.597036665

9.571419866

2010

3.22

10.03685292

7.696705781

9.546004891

2011

3.06

10.17953373

7.630224411

9.484900032

2012

3.09

9.988274218

7.2757719

9.446743703

2013

3.15

10.0638089

7.429106008

9.363490511

2014

3.27

9.027681664

7.359171206

9.407108989

43

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NORMALITY TEST

DESCRIPTIVE ANALYSIS

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COVARIANCE ANALYSIS

ER
1.000000
---------------

FDI

FDI

0.137461
0.747346
0.4609

1.000000
-------------

BOP

-0.276307
-1.548230
0.1324

-0.039143
-0.210954
0.8344

1.000000
--------------

ED

0.622507
4.283462
0.0002

0.438898
2.630429
0.0135

-0.023566
-0.126940
0.8999

ER

BOP

ED

1.000000
-------------

MULTI REGRESSION ANALYSIS

45

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