The impact of foreign direct investment, labour force, and external debt on economic growth in Indonesia and Malaysia

Malik Cahyadin, Tamat Sarmidi

Research output: Contribution to journalArticle

Abstract

The study aims to estimate the impact of Foreign Direct Investment (FDI), labour, and external debt on economic growth in Indonesia and Malaysia over the period 1980-2016. The findings are expected to serve as a reference for macroeconomic policies in Indonesia and Malaysia. Employing an Autoregressive Distributed Lag Model (ARDL) and Error Correction Model (ECM), we find that FDI, labour force and external debt have a significant impact on the economic growth in the long- and short- run in both countries. Statistically, the estimated models are stable. Therefore, it is recommended that the authorities in Indonesia and Malaysia should concentrate on attracting more quality FDI inflows and properly manage external debts as well as high-skilled labour force, which are vital to economic growth.

Original languageEnglish
JournalJurnal Ekonomi Malaysia
Volume53
Issue number1
DOIs
Publication statusPublished - 1 Jan 2019

Fingerprint

Economic growth
Labor force
External debt
Indonesia
Malaysia
Foreign direct investment
Authority
Labor
Autoregressive distributed lag model
Error correction model
Macroeconomic policy
Skilled labor
Short-run

Keywords

  • ARDL-ECM
  • Economic growth
  • External debt
  • FDI
  • Labour force

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

The impact of foreign direct investment, labour force, and external debt on economic growth in Indonesia and Malaysia. / Cahyadin, Malik; Sarmidi, Tamat.

In: Jurnal Ekonomi Malaysia, Vol. 53, No. 1, 01.01.2019.

Research output: Contribution to journalArticle

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