THE INFLUENCE OF MARKET SIZE, TRADE OPENESS, INFLATION, AND FINANCIAL DEVELOPMENT ON FOREIGN DIRECT INVESTMENT IN INDONESIA
DOI:
https://doi.org/10.51170/jmabr.v4i1.134Keywords:
Market Size, Trade Openess, Inflation, Financial Development, Foreign Direct InvestmentAbstract
This study investigates the empirical relationship between foreign direct investment (FDI) and several macroeconomic indicators, namely market size, trade openness, inflation, and financial development. FDI refers to capital investments made by foreign entities in a host country, offering potential benefits such as job creation, technology transfer, managerial expertise, and expanded access to global markets through exports. The research focuses on macroeconomic variables: market size, trade openness, inflation, and financial development, as key determinants of FDI. Using purposive sampling, the study analyzes secondary annual time-series data spanning from 1994 to 2023. The analysis is conducted through multiple linear regression techniques. The findings indicate that (1) market size significantly and positively affects FDI; (2) trade openness also has a significant positive effect; (3) inflation shows no significant or negative impact; (4) financial development significantly and positively influences FDI; and (5) collectively, the four macroeconomic variables have a significant combined effect on FDI.
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