It had a population of 340,200 inhabitants as at 2002
Its main source of revenue if from oil and gas. Anaman (2002) states that Brunei had an average contribution to its revenue from the oil and gas sector of 80% and 55.2% between 1971 to 1990 and 1991 to 2001 respectively.
Brunei has been facing economic problems since the mid-1980s. This can be reflected in numerous budget deficits since its independence in 1984. (Anaman, 2004). The percentage contribution of oil revenue to total revenue fell from 80% between 1971 to 1990 to 55.2% between 1991 to 2001. this drop represents 31% between the two periods. Given that Brunei depended so much on oil revenue, we can see that a decrease of 31% should be a cause for concern to the government and economic policy makers.
The Asian Financial crises also sent negative shock waves to Brunei and the country witnessed a 14% drop in economic growth during the period 1997-1998 and the per capita real gross domestic product has been witnessing a constant drop since 1991. (Anaman, 2004: pp 779). Table one below shows estimated annual constant growth rates of selected macroeconomic variables for Brunei between the period 1971 to 2001 expressed in percentages based on the semi-logarithmic function. These figures show significant differences between the two periods with the period 1991 to 2001 showing very negative impacts on the economy.
Source: Anaman (2004: pp 779).
Policy makers have shown some concern to this slow growth rates in RGDP in the 1990s. The government's focus has been on the slow down of the economy in 1997 brought about by the recent Asian Financial crises, which began in Thailand. To this effect, the government established a Ministerial task Force of Economic in 1998, involving members of the public and private sector to discuss means of reviving the economy and developing a blue print for the development of long-term plans for economic growth and development. (Anaman, 2004: pp 779).
The Brunei Economic Development Board (BEDB) was established in November 2001 by the government to oversee the implementation of policies to establish sustainable economic growth and development in the country. The BDEC has as its main objective, the attraction of foreign investment into Brunei to undertake projects in different areas of the economy. (2004: pp 779).
The objective of this study is to study the impact of foreign direct investment on Brunei by studying the linear relationships between macroeconomic variables and foreign direct investments. I will make use of regression analyses to study linear relationships between the variables and foreign direct investment.
A regression model is a model that studies the relationship between two or more variables the independent variables and dependent variable. It studies how changes in the independent variable affect the dependent variabl