Investment climate and foreign direct investment in Malaysia: firm-level evidence

Most of the foreign direct investment (FDI) studies on location determinants are based on macroeconomic characteristics. However, it is important to understand to what extent microeconomic obstacles hinder FDI. This study explores obstacles to FDI in Malaysia, based on firm-level data. To overcome the problem of uncertainty in variable selection, Bayesian model averaging for logistic regression is employed. Using the Enterprise Surveys 2015 dataset for analysis, the Bayesian logistic regression approach provides robust findings on the importance of access to land, crime, and disorder as obstacles to FDI.