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Articles
Articles
Macroeconomic and Political Determinants of Foreign Direct Investment in Indonesia: An Error Correction Model Aproach
Dirham Syafitra, Abd. Rahim, Sri Astuty, Irwandi
View Author Affiliations
- Dirham Syafitra: Universitas Negeri Makassar, Indonesia
- Abd. Rahim: Universitas Negeri Makassar, Indonesia
- Sri Astuty: Universitas Negeri Makassar, Indonesia
- Irwandi: Universitas Negeri Makassar, Indonesia
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Abstract
This study examines the effects of Gross Domestic Product (GDP), inflation, interest rates, and political stability on Foreign Direct Investment (FDI) in Indonesia over the period 2003 to 2024. The study employs the Error Correction Model (ECM) to distinguish between short-run and long-run relationships. The results indicate that inflation has a positive and significant effect on FDI in the short run, while political stability has a positive and significant effect on FDI in the long run. Meanwhile, GDP and interest rates do not show a statistically significant effect. These findings suggest that political stability and inflation control should be key priorities in efforts to attract foreign investment.
Keywords
Author Biographies
Dirham Syafitra
Universitas Negeri Makassar
Development Economics Study Program, Faculty of Economics and Business, Universitas Negeri Makassar, Makassar City, South Sulawesi Province, Indonesia.
Abd. Rahim
Universitas Negeri Makassar
Development Economics Study Program, Faculty of Economics and Business, Universitas Negeri Makassar, Makassar City, South Sulawesi Province, Indonesia.
Sri Astuty
Universitas Negeri Makassar
Development Economics Study Program, Faculty of Economics and Business, Universitas Negeri Makassar, Makassar City, South Sulawesi Province, Indonesia.
Irwandi
Universitas Negeri Makassar
Development Economics Study Program, Faculty of Economics and Business, Universitas Negeri Makassar, Makassar City, South Sulawesi Province, Indonesia.
Article Identifiers
- Article Title: Macroeconomic and Political Determinants of Foreign Direct Investment in Indonesia: An Error Correction Model Aproach
- DOI: 10.59431/ijer.v6i2.875
- Publication Date: 2026-06-28
- Journal: Indonesian Journal Economic Review (IJER)
- Volume: 6
- Issue: 2
- Pages: 945-955
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Issue Information
Article Details
| Volume: | 6 |
| Issue: | 2 |
| Year: | 2026 |
| Published: | 2026-06-28 |
| Pages: | 945-955 |
| Section: | Articles |
Additional Information
How to Cite
Syafitra, D., Rahim, A., Astuty, S., & Irwandi. (2026). Macroeconomic and Political Determinants of Foreign Direct Investment in Indonesia: An Error Correction Model Aproach. Indonesian Journal Economic Review (IJER), 6(2), 945-955. https://doi.org/10.59431/ijer.v6i2.875
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This work is licensed under a Creative Commons License.
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