THE RELATIONSHIP BETWEEN FOREIGN DIRECT INVESTMENT AND GROSS DOMESTIC PRODUCT IN INDONESIA

• Main Author: Sartika (NIM : 19009168), Alfiani
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/25338
• Institution: Institut Teknologi Bandung

Indonesia is growing country that concern to its economic development. It has tried to <br /> <br /> <br /> <br /> <br /> develop since it first declared its independence. Since 1998, Indonesia had experienced <br /> <br /> <br /> <br /> <br /> many crisis. Some of crisis were crisis on 1998 and crisis on 2008. The reason why the <br /> <br /> <br /> <br /> <br /> crisis happened was caused by fund need from many sectors in Indonesia. On crisis 1998, <br /> <br /> <br /> <br /> <br /> the main reason that caused crisis was because leakage in private business sector of <br /> <br /> <br /> <br /> <br /> Indonesia that borrowed money from foreign investor and on crisis 2008, the main reason <br /> <br /> <br /> <br /> <br /> that caused crisis was because money withdrawal by foreign investor. All of the reasons <br /> <br /> <br /> <br /> <br /> were related to condition of foreign investment in Indonesia. <br /> <br /> <br /> <br /> <br /> Foreign direct investment is considered brings impact to economic development of <br /> <br /> <br /> <br /> <br /> Indonesia that is usually denominated by gross domestic product (GDP). Try to prove the <br /> <br /> <br /> <br /> <br /> relationship between foreign direct investment and gross domestic product of Indonesia is <br /> <br /> <br /> <br /> <br /> main objective in this research. This research talks about linear regression analysis <br /> <br /> <br /> <br /> <br /> between two variables. The two variables are FDI as independent variable and GDP as <br /> <br /> <br /> <br /> <br /> dependent variable. Used Gauss Markov assumptions helps in proving the validity of <br /> <br /> <br /> <br /> <br /> regression. It will show that the regression is BLUE that followed by some terminologies. <br /> <br /> <br /> <br /> <br /> The terminologies that pertains BLUE are heteroskedasticiy, autocorrelation, <br /> <br /> <br /> <br /> <br /> multicollinearity, and normal distribution. Computing the data by SPSS software supports <br /> <br /> <br /> <br /> <br /> analysis related to that BLUE. <br /> <br /> <br /> <br /> <br /> Baesd on T-test , it concludes to reject Ho that says FDI does not drive GDP. It does not <br /> <br /> <br /> <br /> <br /> reject Ha that says FDI drives GDP. It indicates from R Squared that 86.3% variance of <br /> <br /> <br /> <br /> <br /> Gross Domestic Product is affected by independent variable of FDI and there is stil 13.7% <br /> <br /> <br /> <br /> <br /> variance of Gross Domestic Product is affected by other independent variables. The <br /> <br /> <br /> <br /> <br /> assumptions of Gauss Markov that talks about heteroskedasticity, autocorrelation, <br /> <br /> <br /> <br /> <br /> multicolinearity and normal distribution have been covered and showed positive answer. <br /> <br /> <br /> <br /> <br /> F rom histogram, normal P-P Plot and scatterplot, it answered the assumptions that the <br /> <br /> <br /> <br /> <br /> errors of data have no autocorrelation, have fulfilled the heteroskedasticity, and have <br /> <br /> <br /> <br /> <br /> shown to be distributed well in normal distribution. Because this type of analysis is simple <br /> <br /> <br /> <br /> <br /> linear regression analysis, it does not related to multicolinearity. This results significantly <br /> <br /> <br /> <br /> <br /> proves that the regression is BLUE. <br /> <br /> <br /> <br /> <br /> By this depth analysis, it proves relationship between the independent variable FDI and the <br /> <br /> <br /> <br /> <br /> dependent variable GDP. Through positive relationship between FDI and GDP, future <br /> <br /> <br /> <br /> <br /> GDP condition in Indonesia could be predicted by past FDI condition in Indonesia. It is <br /> <br /> <br /> <br /> <br /> hoped that this can bring knowledge for better understanding about economic condition in <br /> <br /> <br /> <br /> <br /> Indonesia. <br /> <br /> <br /> <br /> <br /> Keyword: Foreign Direct Investment, Gross Domestic Product