what happens when a major Trading partner like United States pull out their investment from a mid size country

Question

United States have up to $46 billion dollars about 16% contribution to Malaysian Economy. So What if US was to pull out these investment due to any reason, how would this affect Malaysian Economy?

Answer 1

There would be a substantial slowing of the economy, as most of the dollars contributed to the Malaysian economy are to be used to fund investment in businesses. With this money suddenly gone, investment would decline significantly. The economy would worsen, unemployment would rise, and with the rise in unemployment, poverty would increase as well. The leaders of the economy may get significantly poorer as well, as aid is often corruptly skimmed off to support their lifestyles.

Answer 2

You are mixing together trade and investment. The $46 billion sounds like the U.S. imports from Malaysia.

But, just to humor you, the effect of U.S. investors pulling out of Malaysia will largely depend on whether their mood will be shared by other investors (most notably, domestic and Japanese). If neither domestic nor Japanese investors think that the country is headed for trouble, you would see a temporary dip in the stock market and a lot of activity in private equity and real estate, with no noticeable impact on the rest of the economy. If, however, everyone is pessimistic, this could lead to another 1998...

Answer 3

The poor would get poorer. The rich would get more corrupt to stay about as rich as they were before.