Role of Finance in Moderating Technology, Innovation, and Engineering Effect on Economic Growth in Malaysia

Abstract

A financial indicator has been a significant factor for countries to sustain long-run economic growth. To achieve economic growth, countries need to be supported by financial development. Countries with a good financial system can attract inflows of foreign investment that can gain advanced technology, improve the quality of infrastructure, involved actively in Research and Development (R&D), and innovative activity, especially for developing countries that lag behind the developed countries. Innovation is a major driver for businesses with strong engineering capabilities. Engineering will play crucial roles in managing the spending, guiding the initial scoping, informing decision-makers, managing projects, prioritising maintenance, and ensuring taxpayers get value for money. This study aimed to examine the role of finance in moderating the impact of technology, innovation, and engineering on economic growth in Malaysia. The estimation data was from 2000 to 2020. The empirical analysis involved the estimation using Autoregressive Distributed Lags (ARDL) approach. The empirical results revealed that finance played an important role in moderating engineering activity in influencing Malaysia’s economic growth. This suggests that Malaysia with a better financial system can further enhance its engineering activity and eventually the economic growth in long-run.