Determinant Factors on Indonesia's Economic Growth: An Analysis of Foreign Debt, Foreign Investment, Exports, and Exchange Reserves

Abstract

The study objective is to examine the impact of foreign debt, foreign investment, exports, and exchange reserves on Indonesia's economic growth, specifically quarterly data spanning the years 2008 to 2018. Furthermore, a variety of tests were employed to analyze the data, including stationarity, causality, cointegration, statistical, and ARCH-GARCH analysis. Among these, the GARCH (2.2) model is considered the most effective for conducting ARCH-GARCH analysis. The results demonstrate that foreign debt, foreign investment, and exports positively and significantly affect Indonesia's economic growth. On the other hand, the exchange reserves variable negatively and significantly impacts Indonesia's economic growth. Therefore, it can be concluded that foreign debt, foreign investment, as well as exports contribute positively to the country's economic growth, while exchange reserves have a detrimental effect.