Identifying the Influence of Foreign Direct Investment Toward the ASEAN Economic Community 2025
Abstract
ASEAN as a region has a great economic potential, which explains the large interest in terms of investment in the region. The ASEAN Economic Community (AEC) cooperation program is also a milestone in increasing foreign investment in ASEAN. This study uses a quantitative approach, with the subject of this research being 10 ASEAN countries in 2015–2021. The dependent variable used in this study is foreign direct investment, and the independent variables are government effectiveness, political stability, trade openness, and the workforce. The data in this study comes from the world bank. The analytical method applied in this study is the panel data regression analysis method. Based on the research results, it can be concluded that trade openness and labor force had a positive and significant impact on foreign direct investment in 10 ASEAN countries in 2015–2021. At the same time, government effectiveness and political stability had a positive but insignificant effect. The results of simultaneous testing show that government effectiveness, political stability, trade openness, and the workforce influenced foreign direct investment in 10 ASEAN countries in 2015–2021. The government can use this study in determining foreign investment policies, especially those related to maintaining a stable investment climate.
Keywords: ASEAN, foreign direct investment, government effectiveness, labor force, political stability, trade openness
References
[1] Carkovic M, Levine RE. Does Foreign Direct Investment Accelerate Economic Growth. 2002. https://doi.org/10.2139/Ssrn.314924
[2] Alaya M, Nicet-Chenaf, D, et al. Politique D’attractivité Des Ide Et Dynamique De Croissance Et De Convergence Dans Les Pays Du Sud Est De La Méditerranée. Cah Du Gretha.
[3] Lin J. Economic development. resource-rich, labor-abundant economies. World Bank; 2011.
[4] Sukirno S. Makroekonomi modern. Raja Grafindo Persada; 2000.
[5] Bouchoucha N, Yahyaoui I. Governance and foreign direct investment: A comparative analysis between low- and middle-income African countries. Munich Pers Repec Arch Pap.
[6] Drajat EU. Pengaruh kualitas pemerintahan terhadap penanaman modal asing. Jurnal Ekonomi Dan Bisnis. 2022;11:24–34.
[7] Dunning JH, Lundan SM. Institutions and the oli paradigm of the multinational enterprise. Asia Pac J Manage. 2008;25(4):573–593.
[8] Septiantoro A, Hasanah H, Alexandi MF, Nugraheni SR. Apakah kualitas institusi berpengaruh pada arus masuk fdi di Asean? Jurnal Ekonomi Dan Pembangunan Indonesia. 2020;20(2):197–211.
[9] Nairobi N, Afif FY. Daya saing dan foreign direct investment. Jurnal Ekonomi Pembangunan. 2022;11(1):51–59.
[10] Lien NT. The effect of trade openness on foreign direct investment in Vietnam. Journal of Asian Finance, Economics, and Business. 2021;8(3):111–118.
[11] Meidayati A. Impact of telecommunication infrastructure, market size, trade openness and labor force on foreign direct investment in Asean. J Dev Econ. 2017;2(2):73–80.
[12] Nguyen CH. Labor force and foreign direct investment: Empirical evidence from Vietnam. Journal of Asian Finance, Economics, and Business. 2021;8(1):103–112.
[13] Gharaibeh A. The determinants of foreign direct investment-empirical evidence from Bahrain. Int J Bus Soc Sci. 2015;6(8).
[14] Kurniasih E. P. Perkembangan Investasi Asing Di Negara Asean. Prosiding Seminar Akademik Tahunan Ilmu Ekonom Dan Studi Pembangunan.