Macroeconomic Environment for SDG – FDI Drivers in ASEAN

Foreign direct investment (FDI) has long been regarded as a key catalyst for economic growth, productivity improvement, and sustainable development in host economies. For developing nations, particularly those in the ASEAN region, FDI not only provides essential financial capital but also facilitates technology transfer, job creation, and integration into global value chains. In the context of ASEAN’s transition toward the ASEAN Economic Community (AEC) and the global pursuit of the Sustainable Development Goals (SDGs), strengthening the macroeconomic environment to attract quality, sustainable FDI inflows has become an important policy priority. However, a lack of comprehensive and comparable macro-level data has constrained efforts to evaluate the FDI environment across ASEAN countries. To address this gap, this study employs the PESTLE framework (Political – Economic – Social – Technological – Legal – Environmental) to examine macroeconomic drivers of FDI inflows in ASEAN and assess how regional integration contributes to achieving the SDGs. By analyzing selected macroeconomic indicators and FDI data from 2005 onward, the study finds that- (i) all six PESTLE dimensions significantly influence FDI inflows across ASEAN countries; and (ii) commitments under the AEC framework have expanded the regional macroeconomic landscape, particularly in economic and legal dimensions, enhancing ASEAN’s capacity to attract sustainable and inclusive investment aligned with SDG objectives.