Analysis of Factors Influencing Foreign Direct Investment in Indonesia Using the Dunning Model

Muhammad Rizky Dwi Kurniawan; Wirya Wardaya

doi:10.55927/ijbae.v4i4.220

Authors

Muhammad Rizky Dwi Kurniawan Universitas Pembangunan Nasional “Veteran” Jawa Timur
Wirya Wardaya Universitas Pembangunan Nasional “Veteran” Jawa Timur

DOI:

https://doi.org/10.55927/ijbae.v4i4.220

Keywords:

Foreign Direct Investment, Gross Domestic Product, Exchange Rate, Trade Openness, Infrastructure

Abstract

This study aims analyze the factors influencing Foreign Direct Investment in Indonesia using the Dunning Eclectic Theory approach. The independent variables tested include Gross Domestic Product (GDP), exchange rate, trade openness, and infrastructure, with FDI as the dependent variable. A descriptive quantitative method was employed using annual secondary data from 2004 to 2023. The Error Correction Model (ECM) was applied to examine both short-term and long-term effects. The results indicate that in the long term, trade openness and infrastructure have a significant impact on FDI, while GDP and exchange rate are not statistically significant. In the short term, only trade openness significantly affects FDI. Suggest that enhancing international trade and infrastructure development are key to attracting foreign investment into Indonesia.

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