Gondo, Tutik Wiryanti
(2022)
Effect Of Outward Foreign Direct Investment On Gross Domestic
Product, Domestic Investment, And Unemployment In Indonesia.
PhD thesis, Universiti Sains Malaysia.
Abstract
Gross Domestic Product (GDP) of Indonesia is growing but at relatively
low rates if compared to the rates before the 1997 economic crisis. This could be
explained by the low domestic investment which is only at its high recently but
may be due to outward Foreign Direct Investment (OFDI). As part of the
implication ofklow growth rate ofGDP and domestic investment in Indonesia, the
unemployment rate is started to take off again recently, after a serious decline in the
last decade. This suspects that the answer lies in the outward FDI. Hence, the key
questions of this study are to investigate the effect of outward FDI on GDP,
domestic investment, and unemployment in Indonesia. Since OFDI is not easy to
handle as it is done by private firms, this study believes that several mitigating
strategies of the potential adverse effect of OFDI should be designed, namely by
inviting more inward foreign direct investment (IFDI), and promoting better
education, and domestic financial development. This study tries to confirm their
importance by setting them as another three objectives of this study. Utilizing data
of Indonesia spanning from 1980 till 2018 by using vector error correction model
approach, this study confirms that OFDI has a negative impact on GDP,
investment, and unemployment in Indonesia.
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