The Influence of Foreign Direct Investment (FDI), Gross Domestic Product (GDP) and Imports on Exports in Indonesia

Abstract

The objective of this study is to investigate how Foreign Direct Investment (FDI), Gross Domestic Product (GDP), and Imports affect Export performance in Indonesia. Annual data spanning from 1992 to 2022 was gathered and subjected to analysis using the linear regression method in conjunction with the Vector Error Correction Model (VECM). The findings of the analysis reveal that exports exhibit self-influence, as well as influence from FDI and GDP. Additionally, FDI shows a positive impact on both exports and GDP, while GDP demonstrates a positive effect on exports and FDI. Furthermore, imports also exert an influence on exports and FDI. Policy recommendations stemming from these results include stimulating export activities through incentives and promotional efforts, enhancing collaboration with foreign investors, improving infrastructure development alongside prudent monetary policies, diversifying products and markets, boosting education and training initiatives, and fostering partnerships with the private sector.