Determinants of foreign direct investment in Southeast and South Asian countries

Abstract

The purpose of this study is to describe the Foreign Direct Investment (FDI) determinants of 6 countries, each of which is 3 countries from Southeast Asia and South Asia. Foreign Direct Investment (FDI) shows capital flows in 6 countries (Indonesia, Philippines, Malaysia, India, Pakistan and Bangladesh) that are affected by inflation, wage, Exchange Rate, Market Size and Trade Openness. The research method used is the regression of panel data for the period 2004-2019 from 6 countries in Southeast Asia obtained from the World Bank database. The results showed simultaneously and partially variable wage, exchange rate, market size and trade openness had a significant relationship with FDI inflows, except for variable inflation at α = 10%. Of the several variables studied, the dominant variable affecting the inflow of FDI in a country is the size of the market and followed by the wage level. In addition, of the 6 countries studied by countries that have great potential as recipients of FDI is Philippines.