This paper aims to examine the impact of foreign direct investment (FDI) on the unemployment rate and economic growth in Malaysia from 1980 to 2010. The ordinary least squares method is employed to analyze the data in this study. Findings indicate that FDI helped reduce the unemployment rate and increased the gross domestic product (GDP). A 1% increase in FDI caused a decrease of 0.009% in unemployment and an increase of 1.219% in GDP. These findings are highly important in policy formulation and implementation. The government should be concerned about FDI, which can benefit the Malaysian economy. FDI can also create more domestic jobs and intensify the economic growth of the country.
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