Abstract
Foreign Direct Investment gave benefits in improving Indonesia's economics matters in Indonesia. Conseptually, Foreign Direct Investment (FDI) more benefecial because no return to the investor such as debt in foreign country, beside Foreign Direct Investment (FDI) in a country will be followed by transfer of technology, know-how, management skills, the risks of business was smaller and more profitable. However, the problem of global economic that occured affecting the development of Foreign Direct Investment (FDI) in Indonesia decreased and the growth became slowly. Then domestic and global factors weren’t stable influencing the decrease Foreign Direct Investment (FDI) in Indonesia. Therefore, it’s needed to examine the factors influencing Foreign Direct Investment (FDI). This study aimed to know and analyze some factors affecting Foreign Direct Investment (FDI) in Indonesia consisting gross domestic product, the level of real interest, exchange rates, labour produtivity, and exports. The affecting analysis be done in short-time by using Error Correction Mechanism = ECM technique. It was used time series data from 2000 to 2013 using Eviews 6.0. The type of data used was secondary data obtained from Indonesia Bank (BI), Central Bureau of Statistics (BPS), Federal Reserve Bank of St. Louis and United Nations Economic Social Commision for Asia and the Pacific (UNESCAP). The results of this study showed that gross domestic product, the level of real interest, exchange rates, and labour productivity had positive affection significantly on Foreign Direct Investment (FDI) in Indonesia. While the exports had negative affection significantly on Foreign Direct Investment (FDI) in Indonesia. From determination coefficient (R2) showed that the variables explained 97.13 percent on Foreign Direct Investment (FDI) in Indonesia while the rest 2.87 percent was explained by variables out of models (not studied).
Highlights
INTRODUCTION s a developing country, Indonesia needs a significant amount of funds in national development
RESEARCH METHOD The analysis model used in this study refers to the basic model of multiple linear regression equations with the Engle-Granger Error Correction Mechanism (EG-ECM) method in estimating the short-term relationship between gross domestic product variables, real interest rates, foreign exchange rates, labor productivity and exports by foreign direct investment in Indonesia
The estimation results can be seen that the statistical F value of 33.88837 with a statistical probability of 0.000225 is smaller than α = 0.05 which indicates that together all the independent variables, namely gross domestic product, ethnic level interest, the rupiah exchange rate, labor productivity, and exports as well as the error correction term (ECT) have a significant effect on foreign direct investment in Indonesia
Summary
INTRODUCTION s a developing country, Indonesia needs a significant amount of funds in national development. That this phenomenon becomes interesting to observe further For this reason, it is necessary to pay attention to the development of fundamental factors affecting foreign direct investment in Indonesia such as: GDP, interest rates, exchange rates, labor productivity and exports from 2008 to 2013 as follows: Year. In 2012-2013, the development of export value in Indonesia experienced a decline This is due to the slowing global economy as a result of reduced growth in emerging market countries that has reduced demand for Indonesian exports. RESEARCH METHOD The analysis model used in this study refers to the basic model of multiple linear regression equations with the Engle-Granger Error Correction Mechanism (EG-ECM) method in estimating the short-term relationship between gross domestic product variables, real interest rates, foreign exchange rates, labor productivity and exports by foreign direct investment in Indonesia. Increasing worker productivity is very important with the demands of the labor market which demands the provision of skilled workers
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