Analysis of Economic Factors and Corruption on Foreign Direct Investment in ASEAN Countries

Abstract

This study aims to analyze the effects of economic growth, inflation, trade openness, exchange rates, interest rates, and the Corruption Perception Index on foreign direct investment (FDI) in seven ASEAN countries during the period 2010–2024. The study uses panel data that combine time-series and cross-sectional observations. The analytical technique is panel data regression with the Fixed Effect Model approach. The results show that, jointly, economic growth, inflation, trade openness, exchange rates, interest rates, and the Corruption Perception Index have a significant effect on foreign direct investment, with a coefficient of determination of 88.03 percent. Individually, trade openness, interest rates, and the Corruption Perception Index have positive and significant effects on foreign direct investment. Economic growth and inflation have positive but insignificant effects, while the exchange rate has a positive effect that is significant at the 10 percent level.