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Indonesia’s Fdi – Exports – Gdp Growth Nexus: Trade Or Investment - Driven?

Author

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  • Panky Tri Febiyansah

    (LIPI)

Abstract

This paper examines the relationship between foreign direct investment inflow, export and economic growth in Indonesia in a dynamic framework. We uses vector error correction model to estimate the causal relationship between FDI, exports and GDP. The findings in Indonesia’s case verify the proposition that FDI plays an important role which, in turn, together with joint FDI-exports can promote economic growth in the immediate short run and improve the competitiveness for Indonesia’s commodity exports. Nonetheless, the absence and existence of economic growth effects to FDI and exports respectively indicate that Indonesia still has several domestic economic constraints. It denotes that Indonesia’s economic structure is still transforming and far from adequate. Indonesia needs bold policies in order to accelerateits economic growth and further integrate trade chains for reducing domestic economic restrictions and improving Indonesia’s degree of competitiveness.

Suggested Citation

  • Panky Tri Febiyansah, 2017. "Indonesia’s Fdi – Exports – Gdp Growth Nexus: Trade Or Investment - Driven?," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 19(4), pages 1-20, April.
    • Handle: RePEc:idn:journl:v:19:y:2017:i:4:p:1-20
    DOI: https://doi.org/10.21098/bemp.v19i4.696
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    Citations

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    Cited by:

    1. Seema Wati Narayan, 2019. "Does Fintech Matter For Indonesia’S Economic Growth?," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 22(4), pages 437-456, December.
    2. Zheng, Mingbo & Feng, Gen-Fu & Feng, Suling & Yuan, Xuemei, 2019. "The road to innovation vs. the role of globalization: A dynamic quantile investigation," Economic Modelling, Elsevier, vol. 83(C), pages 65-83.
    3. Hu, Haiqing & Wei, Wei & Chang, Chun-Ping, 2022. "Examining the impact of extreme temperature on green innovation in China: Evidence from city-level data," Energy Economics, Elsevier, vol. 114(C).

    More about this item

    Keywords

    Export; Foreign Direct Investment; Growth;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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