ACHIEVEING HIGH INCOME NATION: STUDY ON IMPACT ON INTERNAL AND EXTERNAL FACTORS IN MALAYSIA

Achieving status of high income nation is the target of nation’s government. Malaysia aims to achieve the status of high income nation by year 2020. In order to achieve the goal, it is crucial to identify the determinants contributing to the effort. Economists suggest that the determinant factors of economic growth consists of internal factors and external factors. This study aims to analyze the internal and external; determinants of Malaysia income growth from year 1985 to 2015. ARDL estimation is applied for this purpose. Results indicate that internal factors that contribute significantly in the long run are employee with high education and fixed capital formation while the exogenous factor is export. Internal determinants in short run is fixed capital formation while exogenous determinant is foreign direct investment. Malaysia’s effort in achieving high income nations would be fruitfull given that the government give attention on both internal and external determinants.