PENGARUH PENANAMAN MODAL ASING TERHADAP PERTUMBUHAN EKONOMI DI INDONESIA: ANALISIS DATA PANEL PERIODE 1994-2013

The Impact of Foreign Direct Investment on Indonesian Economic Growth: Panel Data analysis For The Period 1994-2013

Jefry Batara Salebu

MPRA Paper from University Library of Munich, Germany

Abstract: This study analyzes the effect of foreign direct investment (FDI) on economic growth in Indonesia. Panel data of 17 sub-sectors for the period 1994–2013 obtaining a balanced panel of 340 observations are used in the empirical estimation. The Fixed Effect Model is the best model based on redundant fixed effect test and Correlated random effect -Hausman test to find the significant impact of FDI on economic growth. The empirical results show strong evidence that LFDI has a significant and positive influence on LGDP. Based on the result of the regression, it could be said that FDI will boost economic growth in Indonesia. However, it was found that not all sub-sectors of FDI have a significant positive effect on economic growth. There are only four sectors where LFDI has significantly and positively impact to LGDP. Thus, the four sectors of the FDI have a considerable influence on economic growth in Indonesia, so that some supports from the government of Indonesia are needed in this sector, for example tax incentive regulation, to attract FDI from these sub-sectors to invest in Indonesia.

Keywords: Gross Domestic Bruto; Foreign Direct Investment; Panel Data; Fixed Effect Model (search for similar items in EconPapers)
JEL-codes: E62 O11 (search for similar items in EconPapers)
Date: 2014
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Published in PENGARUH PENANAMAN MODAL ASING TERHADAP PERTUMBUHAN EKONOMI DI INDONESIA: ANALISIS DATA PANEL PERIODE 1994-2013 Jurnal BPPK.7(2014): pp. 135-152

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