The Impact of Interest Rate, Corruption Perception Index, and Economic Growth on Foreign Direct Investment in ASEAN-6

Diella Rahmawati Fazira, Malik Cahyadin

Abstract


Foreign Direct Investment (FDI) becomes an economic indicator that drives economic development in developing countries. These countries need to identify some urgent indicators that attract FDI inflows. The interest rate policy is expected to become an effective instrument. This research analyzed the impact of economic growth, interest rate, and Corruption Perception Index (CPI) on FDI in ASEAN-6 in 2004-2016. ASEAN-6 were six of ASEAN member countries: Indonesia, Singapore, Malaysia, Thailand, Philippines, and Vietnam. The secondary data was collected from the reports of the World Bank, UNCTAD and Transparency International. This research used panel data with Fixed Effect Model (FEM). This research concluded that economic growth and interest rate had a positive and significant impact on FDI while CPI had a negative and significant impact on FDI. The recommendation of this research was the governments of ASEAN-6 maintain domestic economy to attract FDI. The domestic economy reflected by economic growth and interest rate. In addition, the governments need to improve the governance of FDI through the empowerment of anti-corruption institution.

JEL Classification: E22, E43

DOI: https://doi.org/10.26905/jkdp.v22i4.2355


Keywords


Corruption Perception Index; Economic Growth; Foreign Direct Investment; Fixed Effect Model; Interest Rate

Full Text:

PDF

References


Anna, C., Karambakuwa, R. T., Webster, D., Felex, Y., Zivanai, O., Lovemore, M., & Mudavanhu, V. (2012). The impact of interest rates on foreign direct investment: A case study of the Zimbabwean economy (February 2009-June 2011). International Journal of Management Sciences and Business Research, 1(5), 1-24.

Anwar, C. J., Kuswantoro, & Dewi, S. F. (2016). Faktor Faktor yang mempengaruhi Foreign Direct Investment (FDI) di Kawasan Asia Tenggara. Media Trend, 11(2), 175-194. https://doi.org/10.21107/mediatrend.v11i2.1621

Azam, M. (2011). Comparative study of the economic determinants of foreign direct invest-ment in Pakistan, India, and Indonesia. Journal of Indonesian Economy and Business, 26(1), 1–9. https://doi.org/10.22146/jieb.6275

Budijanto, M., & Rachman, B. (2010). Foreign Direct Investment and one digit standard inter-national trade classification. Economic Journal of Emerging Market, 2(3), 265-276. Re-trieved from: http://journal.uii.ac.id/JEP/article/view/2309

Cavallari, L., & d'Addona, S. (2013). Nominal and real volatility as determinants of FDI. Ap-plied Economics, 45(18), 2603-2610. https://doi.org/10.1080/00036846.2012.674206

Febriana, A., & Muqorrobin, M. (2014). Investasi asing langsung di indonesia and faktor-faktor yang mempengaruhinya. Jurnal Ekonomi dan Studi Pembangunan. 15(2), 109-117.

Freckleton, M., Wright, A., & Craigwell, R. (2012). Economic growth, foreign direct investment, and corruption in developed and developing countries. Journal of Economic Studies, 39(6), 639-652. https://doi.org/10.1108/01443581211274593

Gujarati, D. N., & Porter, D. C. (2009). Basic Econometrics. Singapura: The McGraw-Hill Com-panies Inc.

Gürsoy, F., Sekreter, A., & Kalyoncu, H. (2013). FDI and economic growth relationship based on cross-country comparison. International Journal of Economics and Financial Issues, 3(2), 519-524.

Hossain, S. (2016). Foreign direct investment (FDI) and corruption: Is it a major hindrance for encouraging inward FDI? African Journal of Business Management, 10(10), 256-269. https://doi.org/10.5897/AJBM2016.8032

Juanda, B., & Mahyuddin. (2009). The impact of macroeconomic indicators to foreign investment in Indonesia. Jurnal Ekonomi dan Pembangunan Indonesia, 9(2), 157-169. https://doi.org/10.21002/jepi.v9i2.165

Krugman, P. R., Obstfeld, M., & Melitz, M. J. (2014). International Economics: Theory and Policy. Tenth Edition. Global Edition. USA: Pearson Education.

Malik, S., & Malik, Q. A. (2013). Empirical analysis of macroeconomic indicators as determinants of Foreign Direct Investment in Pakistan. IOSR Journal of Business and Management, 7(2), 77-82.

Puspitasari, G., & Cahyadin, M. (2014). The impact of Gross Domestic Product (GDP) and exchange rate of main trade partners on export of natural rubber of Indonesia in 2000-2012. Kajian, 19(1), 21-31.

Quazi, R. M. (2014). Corruption and foreign direct investment in East Asia and South Asia: An econometric study. International Journal of Economics and Financial Issues, 4(2), 231-242. http://www.econjournals.com/index.php/ijefi/article/view/695

Siddiqui, H. A. A., & Aumeboonsuke, V. (2014). Role of interest rate in attracting the FDI: Study on ASEAN 5 Economy. International Journal of Technical Research and Applications, 2(3), 59-70.

Sudarsono, H. (2008). The determinants of FDI flows in OIC countries. Jurnal Ekonomi Pembangunan, 13(3), 207-216.




DOI: https://doi.org/10.26905/jkdp.v22i4.2355

Refbacks

  • There are currently no refbacks.


Bookmark and Share


Jurnal Keuangan dan Perbankan (Journal of Finance and Banking)

Diploma Program of Banking and Finance, Faculty of Economics and Business, University of Merdeka Malang

Published by University of Merdeka Malang

Mailing Address:
2nd floor Finance and Banking Building, Jl. Terusan Raya Dieng No. 57 Malang, East Java, Indonesia
Phone: -
Email: [email protected]

This work is licensed under a Creative
Commons Attribution-ShareAlike 4.0