Current Issue in International Financial Economic GD30203Presentation Date: 5 May 2014

Project Title Corruption and Foreign Direct Investment in ASEAN 7: An Econometrics' Study a Panel Data ApproachGroup Members:

Hanis Rashidah Binti Zainul AmriBG12110137

Slide Overview*CHAPTER 1CHAPTER 2CHAPTER 3CHAPTER 4CHAPTER 5

IntroductionMotivation of StudyProblem StatementResearch QuestionObjective of StudySignificance of study

Literature Review

Data & Methodology

Empirical Result

Policy ImplicationLimitation of StudyRecommendation for Future ResearchConclusion

IntroductionFDI is part of the economic improvement approach and an important objective of the ASEAN Economic Community (AEC), especially in the present framework when the world economic slowdown

ASEAN region is considered to be an attractive target for foreign investors because this part of the world has a lot of factors that attract FDI (cheaper costs, especially labor costs and material costs, economic development at a rapid rate and many preferential investment policies attractive).

Empirically analyze on the determination of FDI in the selected ASEAN country which are Malaysia, Singapore, Thailand, Philippines, Indonesia, Cambodia, and Vietnam*Chapter 1

Theoretical Framework*CORRUPTIONECONOMIC STABILITYINFRASTRUCTUREHUMAN CAPITALForeign Direct Investment (FDI)Model:Chapter 1FDIi,t = + 1Corruptionii,t + 2Economic Stabilityi,t + 3Infrastructureii,t + 4Human Capitalii,t + 5Market Sizeii,t + 6Political Stabilityii,t + MARKET SIZEPOLITICAL STABILITY

Research QuestionDoes the Foreign Direct Investment (FDI) has a relationship with corruption in ASEAN 7?Does Foreign Direct Investment (FDI), effect the relatives of independent variables such as corruption, economic stability, infrastructure, human capital, market size and political stability show effect with the content of selected country in ASEAN 7 such as Malaysia, Thailand, Cambodia, Singapore, Indonesia, Vietnam, and The Philippines?

*Chapter 1

OBJECTIVE*Chapter 1

Literature Review*Chapter 2

Data & Methodology Sample Period

Definition of Data

*Chapter 3

CountrySample PeriodSingapore2005 - 2011Malaysia2005 - 2011Thailand 2005 2011Indonesia2005 2011Philippines 2005 - 2011Vietnam2005-2011Cambodia2005-2011

CorruptionEconomic Stability InfrastructureHuman CapitalMarket SizePolitical StabilityThe Corruption Perception Index by Transperancy International. The index range from 0 (perceived as highly corrupt) and 10 (perceived as very clean) the rate of inflation measured by the annual percentage change of consumer prices and the data was retrieved from World Bank IBRD-IDA the natural log of per capita electricity consumption (in kilowatt hours) retrieved from the World BankA natural log of per capita health care expenditures the natural log countrys population growthpolitical stability and absence of violence and the data was retrieved from Worldwide Governance Indicators which is the estimate of governance and ranges from approximately -2.5 (weak) to 2.5 (strong) of governance performance

Empirical Result*Chapter 4

MODEL 1MODEL 3EXPLANTORY VARIABLEPOOLED REGRESSION RANDOM REGRESSIONC-1.103520-1.103520[2.143298][2.065942] Corruption (CORR)3.688727**3.688727**[1.723113][1.660922] Economic Stabitity (ES)0.0341970.034197[0.027205][0.026224] Infrastructure (INFRAS)-0.409152-0.409152[0.255199][0.245989] Human Capital (HC)-0.050434-0.050434[0.558767][0.538600] Market Size (MS)0.241020**0.241020**[0.117327][0.113092] Political Stability (PS)-0.573752-0.573752[0.551963][0.532042] R-squared0.5494420.549442 Durbin-Watson stat1.8659991.865999 F-statistic8.5363068.536306 Prob (F-statistic)0.0000040.000004

Unit Root TestChapter 4*

CorruptionNo constant & no trendConstant & no trendConstant& trendLevels

No constant & no trendConstant & no trendConstant& trendLevels

Unit Root TestChapter 4*

No constant & no trendConstant & no trendConstant& trendLevels1st difference

No constant & no trendConstant & no trendConstant& trendLevels1st difference

INo constant & no trendConstant & no trendConstant& trendLevels1st difference

Policy Implicationthese countries should focus on reducing corruption by enforcing existing anti-corruption policies and/or adopting new strategies.government strategies to promote their higher FDI should comprise high level of population growth in countries which is favorable for investors since huge population indicates a large market for doing business

limited number of studies by international academics on Corruption and Foreign Direct Investment in ASEAN 7 2) Lack of datathe findings of this study were drawn from the data that covered a seven year period only from 2005 - 2011

*Limitation of StudyChapter 5

Recommendation for FutureThis study has found that the effect of corruption may exist not only in ASEAN 7 but also in other regions such as East Asia, South Asia, European and America Latin. Besides that, the number of variables should be added for investigating the effect of corruption on FDI in ASEAN countries.another method such as Time Series Data were recommended to be used in future research*Chapter 5

ConclusionThe economic growth literature generally holds that FDI plays an important role in the growth dynamics of developing countries*Chapter 5

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