Business Investment Opportunities for Community Welfare: Evidence from Indonesia

Sidik Budiono; John Tampil Purba

doi:10.23762/FSO_VOL12_NO3_6

Published : 2024-09-30

Vol. 12 No. 3 (2024)

Business Investment Opportunities for Community Welfare: Evidence from Indonesia

Sidik Budiono

https://orcid.org/0000-0003-1065-713X

John Tampil Purba

https://orcid.org/0000-0001-6994-6601

DOI: https://doi.org/10.23762/FSO_VOL12_NO3_6

Abstract

This research uses panel data covering 34 provinces for 13 periods from 2009 to 2021. Foreign direct investment has an important role not only in improving Indonesia's economic position compared to other countries but also as a driver for the sustainability of Indonesia's business and economy. The researchers analyse the extent to which gross domestic regional product (GDRP), domestic investment, the Gini coefficient, and literacy influence foreign direct investment (FDI) inflow into Indonesia. The authors choose the best model among various alternatives, namely, pool, fixed effects, and random effects regression with the Chow and Hausman test methods. Through the best model, namely, refined random effects, the authors prove that GDRP, regional domestic investment, regional Gini coefficient, and regional literacy influence the increase in Indonesia's FDI. This research contributes to the theoretical gap, practical knowledge gap, and empirical gap. The results of this research have a new insight that knowledge and skills, innovation, and a supportive economic situation are the keys to successful business investment movements.

Keywords:

foreign direct investment, gross domestic regional product, domestic investment, Gini coefficient, literacy.

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Budiono, S., & Purba, J. T. (2024). Business Investment Opportunities for Community Welfare: Evidence from Indonesia. Forum Scientiae Oeconomia, 12(3), 114–137. https://doi.org/10.23762/FSO_VOL12_NO3_6

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