Analysis of Foreign Direct Investment in ASEAN-9 Countries:  The Role of Economic Integration

Yuni Shara; Rifki Khoirudin; Uswatun Khasanah

Analysis of Foreign Direct Investment in ASEAN-9 Countries: The Role of Economic Integration

Yuni Shara, Rifki Khoirudin, Uswatun Khasanah

Abstract

The existence of economic globalization, which involves trade and investment liberalization, allows for a more accessible flow of goods, services, and capital. The flow of Foreign Direct Investment to developing countries can help reduce the high inequality rate given the transfer of knowledge and technology, thus accelerating economic growth. Economic integration is a process in which a group of countries seek to increase their prosperity through competitiveness and the welfare of the country itself. This study aims to determine how economic integration affects Foreign Direct Investment in 9 ASEAN member countries. The data is secondary from the World Bank and The Fund for Peace. Data analysis in this study uses panel data including Brunei Darussalam, Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam as cross-section data, and the time series used is 2009-2022. The model used is the SUR (Seemingly Unrelated Regression) panel model. The results of this study found that trade openness and population have a positive effect on FDI. Meanwhile, market size, infrastructure, political fragility, and control of corruption negatively influence FDI.

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