Faktor Penentu Foreign Direct Investment di Negara Sedang Berkembang Determinants of Foreign Direct Investment in Developing Countries

Abstract

Foreign Direct Investment has become an important source of financing for developing countries since 1990. To encourage the entry of FDI, the government must make a domestic policy that is able to attract foreign investor. The first step is identification of macroeconomic variables which determines FDI. Globerman and Shapiro (2005) suggest that macroeconomic variables, such as, market size, resources and financial sector, may be determines FDI in developing countries. The problem is how far the macroeconomic variables can push FDI inflow, in condition, imperfect economic liberalization. This study has proof that market size, include, domestic economy (GDP) and extention of domestic economy (Openness) significantly push FDI inflow. However, debt variable, although related to government policy, significantly impeded FDI inflows