Sri Yani Kusumastuti(1*)

(1) Universitas Trisakti
(*) Corresponding Author


The objective of this study is to shed light on the determinants of foreign direct investment (FDI) in Asian developing countries and their impact on industrial growth. In order to undertake it, we perform an econometric model based in panel data analysis for 9 countries (such as ASEAN 6, China, India, and Korea) for the 1999-2004 periods. We estimate the simultaneous equation using panel data estimation with fixed effect and random effect. Among the major conclusions we have that the FDI is determined by country risk and variables related to macroeconomic indicators like inflation, risk, economy’s degree of openness and average rate of economic growth, average rate of world economic growth, and level of education. The results also show that the FDI has been closely associated with corruption perception index and performance of FDI in the past. However the other variables, such as the global competitive index and rank of investment performance and potential have no more influential on FDI inflows. Finally, we have that the growth of industrial sector is positively related to the FDI inflows.



foreign direct investment, panel data, simultaneous equation, ASEAN

Full Text:



Addison, T. dan A. Heshmati. 2002. “Democratization and New Communication Technologies as Determinants of Foreign Direct Investment in Developing Countries”. Dipresentasikan di The WIDER Conference on ‘The New Economy in Development’ 10-11 May 2002. Helsinki.

Agiomirgianakis, G. M., D. Asteriou dan K. Papathoma. 2006. “The Determinants of Foreign Direct Investment: A Panel Data Study for the OECD Countries”. Discussion Paper Series No. 03. London: Department of Economics, School of Social Science, City University.

Akhter, S. H. 1993. “Foreign Direct Investments in Developing Countries: The Openness Hypothesis and Policy Implications”. The International Trade Journal, 7: 655-72.

Akinkugbe, O. 2003. “Flow of Foreign Direct Investment to Hitherto Neglected Developing Countries”. WIDER Discussion Paper 2003/02. United Nation University. Helsinki.

Alfaro, Laura. 2003. “Foreign Direct Investment and Growth: Does the Sector Matter?” Harvard Business School. Boston. Asian Development Bank. 2004. Asian Development Outlook 2004. Manila

Asiedu, E. 2002. “On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?” World Development 30(1):107-119.

Banga, Rashmi. 2002. “The Differential Impact of Japanese and U.S. Foreign Direct Investments on Exports of Indian Manufacturing” Department of Economics. Jesus and Mary College, Delhi.

Bank Indonesia. 2006. Laporan Perekonomian Indonesia 2006.

_____. 2007. Laporan Perekonomian Indonesia 2007: Menjaga Stabilitas, Mendukung Pembangunan Ekonomi Negeri.

Benacek, V., M. Gronicki, D. Holland, dan M. Sass. 2000. ”The Determinants and Impact of Foreign Direct Investment in Central and Eastern Europe: A comparison of survey and econometric evidence”. Journal of United Nations 9. New York.

Bende-Nabende, A., J. Ford, dan J. Slater. 2001. “FDI, Regional Economic Integration and Endogenous Growth: Some Evidence from Southeast Asia”. Pacific Economic Review 6(3): 383-399

Bessonova. Evguenia, Konstantin Kozlov, dan Ksenia Yudaeva. 2003. “Trade Liberalization, Foreign Direct Investment, and Productivity of Russian Firms” dipresentasikan pada The CEFIR conference on Negotiating Russia's WTO Accession: Strategic Lessons from Multilateral Trade Liberalization and Club Enlargement, Moscow, September.

Bevan, A. A. dan S. Estrin. 2000. “The Determinants of Foreign Direct Investment in Transition Economies”. William Davidson Institute Working Paper 342. London Business School: London.

Blomstrom, Magnus dan Ari Kokko. 2003. “The Economics of Foreign Direct Investment Incentives” Working Paper 9489. National Bureau of Economic Research (NBER), Cambridge.

Borensztein, Eduardo, José De Gregorio, dan Jong-Wha Lee, 1998, “How Does Foreign Direct Investment Affect Growth?” Journal of International Economics 45: 115-135.

Cassou, S. P. 1997. “The Link between Tax Rates and Foreign Direct Investment.” Applied Economics 29(10): 1295-1301. Chantasasawat, B., K.C. Fung, H. Iizaka, dan

A. Siu. 2003. International Competition for Foreign Direct Investment: The Case of China. Dipresentekan di Hitotsubashi Conference on International Trade and FDI, 12-14 Desember 2003. Versi awalnya di presentasikan di The 6th Asian


Article Metrics

Abstract views : 1612 | views : 3884


  • There are currently no refbacks.

Copyright (c)

Journal of Indonesian Economy and Business


Editorial Team
Focus and Scope
Peer Review Process
Publication Ethics
Screening for Plagiarism


Author Guidelines
Submission Guidelines
Online Submissions
Copyright Notice
Privacy Statement
Author Fees


Author Pack
Submission Form & Manuscript Template



Reviewer Guidelines
Reviewer Acknowledgement



General Search
Author index
Title index



The Journal of Indonesian Economy and Business (print ISSN 2085-8272; online ISSN 2338-5847) is published by the Faculty of Economics and Business Universitas Gadjah Mada, Indonesia. The content of this website is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License

© 2019 Journal of Indonesian Economy and Business 
 Visitor Statistics