ANALISIS PENANAMAN MODAL ASING DI INDONESIA TAHUN 2007 - 2016: PENDEKATAN MODEL GRAVITASI
AFRILITA, LISA DEWI
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This research aims to examine the relationship between Foreign Direct Investment (FDI) and the size of the country using the gravity model, whether the larger size of the economy will encourage the investment flows and whether the distance between Indonesia and the investor country will reduce the investment flows. There are several variables used in this study, such as Gross Domestic Product (GDP) per capita Indonesia, Gross Domestic Product (GDP) per capita of investors, distance between Indonesia and investors, recent education level of Indonesian labor, political stability index of Indonesia, and the openness of Indonesian economy. The observation in this study includes the five largest country investors in Indonesia from 2007 to 2016. This study employing panel data with random effect model. Results show that, per capita GDP of both Indonesia and investors, distance, and the openness of Indonesian economy have positive and significant effects on Indonesian FDI, while recent education level and political stability have insignificant effects. Meanwhile, GDP per capita of both Indonesia and investors have positive and significant effects. Apparently, distance seems to have a negative effect on Indonesian FDI. Positive sign in both GDP and a negative sign in distance, these are implying that the gravity model is empirically relevant to Indonesian FDI case.