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FDI and Growth in East Asia: Lessons for Indonesia

Author

Listed:
  • Lipsey, Robert E.

    (NBER)

  • Sjöholm, Fredrik

    (Research Institute of Industrial Economics (IFN))

Abstract

Foreign direct investment has been important in the economic growth and global economic integration of developing countries over the last decades. Both Northeast and Southeast Asia, especially the latter, have been part of this development with increasing inflows of FDI and greater foreign participation in their economies. However, Indonesia has been an outlier within the region, with lower inflows of FDI than other countries, especially in manufacturing, and with lower inflows than could be expected from its size and other country characteristics. The inflows of FDI that have taken place have benefited Indonesia and we use the Asian experience to provide some suggestions as to what measures would increase FDI. A relatively poor business environment with inefficient institutions seems to be an important explanation behind the low inflows of FDI.

Suggested Citation

  • Lipsey, Robert E. & Sjöholm, Fredrik, 2010. "FDI and Growth in East Asia: Lessons for Indonesia," Working Paper Series 852, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0852
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    References listed on IDEAS

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    Cited by:

    1. Catherine Laffineur & Alexandre Gazaniol, 2019. "Foreign direct investment and wage dispersion: Evidence from French employer-employee data," International Economics, CEPII research center, issue 157, pages 203-226.
    2. Muhammad Aiman Haziq Norehan & Abdul Rahim Ridzuan & Shafinar Ismail & Mohamad Idham Md Razak & Mohd Shahidan Shaari, 2022. "The Impact of FDI Inflows and ICT Development towards Economic Growth: Evidence for China and Malaysia," Business and Economic Research, Macrothink Institute, vol. 12(3), pages 43-55, December.
    3. Morrissey, Oliver & Udomkerdmongkol, Manop, 2012. "Governance, Private Investment and Foreign Direct Investment in Developing Countries," World Development, Elsevier, vol. 40(3), pages 437-445.
    4. Moekti P. Soejachmoen, 2015. "Maximizing Opportunities from Global Supply Chains," World Bank Publications - Reports 23510, The World Bank Group.
    5. Arshad, Shaista & Rizvi, Syed Aun R., 2015. "The troika of business cycle, efficiency and volatility. An East Asian perspective," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 419(C), pages 158-170.
    6. Prasetyono, Pipin & Wibowo, Agung, 2016. "Analysing Indonesia’s Foreign Direct Investment Policy Framework," MPRA Paper 97784, University Library of Munich, Germany.
    7. Bibhuti Sarker & Farid Khan, 2020. "Nexus between foreign direct investment and economic growth in Bangladesh: an augmented autoregressive distributed lag bounds testing approach," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-18, December.
    8. Phillip Akanni Olomola & Tolulope Temilola Osinubi, 2018. "Determinants of Total Factor Productivity in Mexico, Indonesia, Nigeria, and Turkey (1980–2014)," Emerging Economy Studies, International Management Institute, vol. 4(2), pages 192-217, November.

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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