c) State and discuss the empirical framework that...

c) State and discuss the empirical framework that underlies the relationship of the study. FDI= ÃŽ ²1 + ÃŽ ²2 GDP + ÃŽ ²3 DT+ ÃŽ ²4EX+ ÃŽ µ Where FDI = Foreign Direct Investment ( RM Million) GDP = Gross Domestic Product (RM Million) DT = Debt (RM Million) EX = Exchange Rate (Official exchange rate of local currency units per US$) ÃŽ µ = Error term Foreign Direct Investment (FDI) is the dependent variable measure in terms of RM Million. Gross Domestic Product (GDP), Debt (DT) and Exchange Rate (EX) are the independent variables or explanatory variables in this multiple regression model .Both GDP and DT measures in terms of RM Million whereas for the Exchange Rate, the unit of measurement is official exchange†¦show more content†¦It arises as the effect of the omitted variables and many other factors. Relationship between GDP and the independents variables ÃŽ ²2 ,Gross Domestic Product (GDP) , in RM Million The expected sign for the slope coefficient (ÃŽ ²2) on GDP is positive which signify relationship between FDI and GDP to be positive after several journals have been study. According to Chowdhury and Mavrotas (2006), a bidirectional causality relationship found between GDP and FDI in the case of Malaysia. It indicates that the FDI and GDP have significant relationship and will affect one and another in the same direction. Kolstad and Villanger (2008) showed that the relationship between FDI and GDP is always positive. When the GDP increases, it means the economy of a country is growing, when the condition of the country is stable, it will attract more foreign investors to invest in the country and thus result in the increasing of FDI. The positive relationship also supported by Oyatoye,Arogundade, Adebisi and Oluwakayode (2011). According to Lim (2001), prospective growth accompany by GDP growth, signals higher return, which attract FDI to a host and reduce outflows from a source country. The strength of the GDP is always a determinant for the foreign investor of FDI into the country (Ali Guo (2005)). If the strength of GDP makes the profit rationale, the investors will always seek to make an