IMPACT OF GOVERNMENT SPENDING AND FOREIGN INVESTMENT ON EXPORTS, IMPORTS, AND ECONOMIC GROWTH IN INDONESIA
Article Sidebar
Published
Jan 31, 2024
Main Article Content
Abstract
Economic integration have an impact on increasing trade volume and production output in various countries. Likewise, the ease of capital mobility between countries, makes investment not only rely on capital derived from domestics, but can come from foreign direct investment.
This study used time series data during the 1980-2019 . The analysis model used is multiple linear regression using, by first testing classical assumptions so that the regression results are Unbias.
The results showed that foreign investment, government spending, and economic openness can significantly increase export, import, and economic growth. Furthermore, the rupiah exchange rate , which is depreciating against the US dollar, can increase export growth and reduce Indonesia's import growth. Meanwhile, higher inflation can cause a significant decline in export and import growth, but an insignificant decline for Indonesia's economic growth.
Downloads
Download data is not yet available.
Article Details
Section
Articles
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
References
Adhikary, B. K. (2012). Impact of foreign direct investment, trade openness, domestic demand, and exchange rate on the export performance of Bangladesh: A VEC approach. Economics research international, 2012.
Akapler, E., & Shamadeen, B. (2017). The Role of Net Export on Economic Growth in United States of America. Journal of Applied Economic Sciences, 12(3).
Al-Edary, A. M., & Al-Shamri, M. S. (2013). The Impact of economic openness degree on GDP growth in Malaysia and some neighboring countries for the period 1990-2010. International Journal of Education and Research, 1(4), 1-22.
Aluthge, C., Jibir, A., & Abdu, M. (2021). Impact of government expenditure on economic growth in Nigeria, 1970-2019. CBN Journal of Applied Statistics, 12(1), 139-174.
Behera, J. (2014). Inflation and its impact on economic growth: Evidence from six South Asian countries. Journal of Economics and Sustainable Development, 5(7), 145-154.
Bhavan, T. (2016). The determinants of export performance: the case of Sri Lanka. International Research Journal of Social Sciences, 5(8), 8-13.
Bibi, S., Ahmad, S. T., & Rashid, H. (2014). Impact of trade openness, FDI, exchange rate and inflation on economic growth: A case study of Pakistan. International Journal of Accounting and Financial Reporting, 4(2), 236.
Blavasciunaite, D., Garsviene, L., & Matuzeviciute, K. (2020). Trade balance effects on economic growth: Evidence from European Union Countries. Economies, 8(3), 54.
Budha, B. B. (2014). The role of expenditure components in Nepal’s import from India. South Asia Economic Journal, 15(1), 37-54.
Çakmak, U., Gökçe, A., & Çakmak, Ö. A. (2016). The key determinants of the import and policy recommendations for Turkish economy. Journal of Economics and Sustainable Development, 7(6), 96-103.
Chani, M. I., Pervaiz, Z., & Chaudhary, A. R. (2011). Determination of Import Demand in Pakistan: The Role of Expenditure Components. Theoretical & applied economics, 18(8).
Chirathivat, Suthiphand. (2002). ASEAN-China Free Trade Area Bacground, implications and Future Development. Journal of Asian Economics 13 (2002) 671-686.
Colander, David C. (2020). Microeconomics. The McGraw-Hill Series In Economics. McGraw-Hill Education
Dornbusch, Rudiger and Stanley Fischer, Richard Startz (2011). Macroeconomics-McGraw-Hill Education
Ekanayake, N. (2016). Determinants of external demand for textiles and garments of Sri Lanka. Staff Studies, 43(1-2).
Fang, Zheng, Bihong Huang & Zhuoxiang Yang. (2018). Trade openness and the environmental Kuznets curve Evidence from Chinese cities. ge. World Economy 1–28. wileyonlinelibrary.com/journal/twec
Galebotswe, O., & Andrias, T. (2011). Are devaluations contractionary in small import-dependent economies? Evidence from Botswana. Botswana Journal of Economics, 8(12), 86-98.
Grubaugh, S. G. (2015). Economic growth and growth in human development. Applied Econometrics and International Development, 15(2), 5-16.
Hamoudi, Mustafa El. & Nagmi Aimer. (2017). The Impact of Foreign Direct Investment on Economic Growth in Libya. International Journal of English Literature and Social Sciences (IJELS). Vol-2, Issue-6, Nov - Dec, 2017. https://dx.doi.org/10.22161/ijels.2.6.22
Hasnul, A. G. (2015). The effects of government expenditure on economic growth: the case of Malaysia.
Hobbs, S., Paparas, D., & E AboElsoud, M. (2021). Does foreign direct investment and trade promote economic growth? Evidence from Albania. Economies, 9(1), 1.
Ibrahim, A. A. A., & Ahmed, E. M. (2017). The determinants of aggregate demand function of Sudan. Business and Economics Journal, 8(3), 1-7.
Itakura, Ken. (2014) Impact of liberalization and improved connectivity and facilitation in ASEAN. http://dx.doi.org/10.1016/j.asieco.2014.09.002 Journal of Asian Economics.
Jiang, W. (2014). The effect of RMB exchange rate volatility on import and export trade in China. International Journal of Academic Research in Business and Social Sciences, 4(1), 615.
Jilenga, M. T., Xu, H., & Gondje-Dacka, I. M. (2016). The impact of external debt and foreign direct investment on economic growth: Empirical evidence from Tanzania. International Journal of Financial Research, 7(2), 154-162.
Kearl, J.R., Scott, & Foresman. (1989). Contemporary Economics, Company. United States of America.
Koojaroenprasit, S. (2012). The impact of foreign direct investment on economic growth: A case study of South Korea. International Journal of Business and Social Science, 3(21).
Kryeziu, N., & Durguti, E. A. (2019). The impact of inflation on economic growth: The case of Eurozone. International Journal of Finance & Banking Studies (2147-4486), 8(1), 01-09.
Lipsey., & Chrystal. (2011). Economics. Oxford University Press, Inc., United States of America.
Makhlouf, Y., Kellard, N. M., & Vinogradov, D. (2015). Trade openness, export diversification, and political regimes. Economics Letters, 136, 25-27.
Malefane, M. R. (2020). Trade openness and economic growth in Botswana: Evidence from cointegration and error-correction modelling. Cogent Economics & Finance, 8(1), 1783878.
Mankiw, N. G., Quah, W. & Wilson, P. (2008). Principles of Economics : An Asian Editition. Cengage Learning Asia Pte Ltd., Singapore.
Malik, S., & Chaudhary, A. R. (2012). The structure and behavior of Pakistan's imports from selected Asian countries: An application of gravity model. Pakistan Journal of Commerce and Social Sciences (PJCSS), 6(1), 53-66.
Mehrara, M., & Firouzjaee, B. A. (2011). Granger causality relationship between export growth and GDP growth in developing countries: Panel cointegration approach. International Journal of Humanities and Social Science, 1(16), 223-231.
McConnell, C. R., Brue, S. L., & Flynn, S. M. (2012). Economics: Principles, problems, and policies. McGraw-Hill, Companies, Inc., United States of America.
Mihaela, Simionescu; Lazányi Kornélia; Sopková Gabriela; Dobeš Kamil; Balcerzak Adam P. (2017). Determinants of Economic Growth in V4 Countries and Romania. Journal of Competitiveness.oai:publikace.k.utb.cz:10563/1007088
Minniti, Antonio and Carmelo P.P. (2011). Trade Interation and Regional Disparity in A Model of Scale-Invariant Growth. Regional Science and Urban Economics 41 (2011) 20-31. www. elsevier.com/locate/regec
Moudatsou, A. (2003). Foreign direct investment and economic growth in the European Union. Journal of Economic Integration, 689-707
Mukit, M. M. H. (2020). An econometric analysis of the macroeconomic determinants impact of gross domestic product (GDP) in Bangladesh. Atlantic Review of Economics: Revista Atlántica de Economía, 3(2), 3.
Mwakanemela, K. (2014). Impact of FDI inflows, trade openness and inflation on the manufacturing export performance of Tanzania: An econometric study. International Journal of Academic Research in Economics and Management Sciences, 3(5), 151.
Narayan, S., & Narayan, P. K. (2004). Determinants of demand for Fiji's exports: an empirical investigation. The Developing Economies, 42(1), 95-112.
Nduka, E. K., Chukwu, J. O., Ugbor, K. I., & Nwakaire, O. N. (2013). Trade openness and economic growth: A comparative analysis of the pre and post structural adjustment programme (SAP) periods in Nigeria. Asian Journal of Business and Economics, 3(3.4), 1-12.
Nguyen, H. (2014). Determinants of Vietnam's Exports: Application of the Gravity Model. Available at SSRN 2475781.
Nteegah, A., & Mansi, N. (2017). Analysis of factors influencing import demand in Nigeria. West African Journal of Industrial and Academic Research, 17(1), 88-100.
Nyeadi, J. D., Atiga, O., & Atogenzoya, C. A. (2014). The impact of exchange rate movement on export: Empirical evidence from Ghana. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(3), 41-48.
Oladele, M. F., Mah, G., & Mongale, I. (2017). The role of government spending on economic growth in a developing country.
Olubokun, S., Ayooluwade, E., & Fawehinmi, F. O. (2016). Government expenditure, inflation rate and economic growth in Nigeria (1981-2013): A vector autoregressive approach. Romanian Journal of Fiscal Policy (RJFP), 7(1), 1-12.
Potelwa, Y., Lubinga, M. H., & Ntshangase, T. (2016). Factors influencing the growth of South Africa's agricultural exports to world markets. European Scientific Journal (2016), Edition, 12.
Rijal, A., Koshal, R. K., & Jung, C. (2000). Determinants of Nepalese imports. Journal of Asian Economics, 11(3), 347-354.
Rizavi, S. S., Khan, M. K., & Mustafa, S. H. (2020). Openness and growth in South Asia. South Asian Studies, 25(2).
Samuelson, P. A., & William. D. N. (2010). Economics. Nineteenth Edition, McGraw-Hill, Inc., United States of America.
Tabassum, U., Nazeer, M., & Siddiqui, A. A. (2012). Impact of FDI on import demand and export supply functions of Pakistan: An econometric approach. Journal of Basic & Applied Sciences, 8(1), 151-159.
Tarawalie, A. B., & Conteh, M. (2021). The Determinants of Export Performance in a Small Open Economy: The Case of Sierra Leone. International Journal of Economics, Finance and Management Sciences, 9(1), 1.
Majeed, M. Tariq & Eatzaz A. (2006). Determinants of export in developing countries. The Pakistan Review, 45(4), 1265-1276.
Tomar, R. S., & Tomar, D. S. (2014). Selected Macro–Economic Variables and its Impact on Chinese and Indian Exports. IOSR Journal of Business and Management (IOSR-JBM), 16(3), 01-08.
Uddin, H., & Khanam, M. J. (2017). Import, export and economic growth: the case of lower income country. Journal of Business and Management, 19(1), 37-42.
Ullah, F., & Rauf, A. (2013). Impacts of macroeconomic variables on economic growth: A panel data analysis of selected Asian countries. International Journal of Information, Business and Management, 5(2), 4.
Uysal, O., & Mohamoud, A. S. (2018). Determinants of export performance in East Africa countries. Chinese Business Review, 17(4), 168-178.
Uzunoz, M., & Akcay, Y. (2009). Factors affecting the import demand of wheat in Turkey. Bulgarian Journal of Agricultural Science, 15(1), 60-66.
Wang, Y., Wang, L., & Li, Z. (2020). Dynamic Analysis of China's Imported Raw Milk Powder Consumption. Sustainability, 12(4), 1542.
Wildan, M. A., Imron, M. A., Siswati, E., & Rosyafah, S. (2020). Macroeconomic Factors Affecting Natural Gas Export Management. International Journal of Energy Economics and Policy, 11(1), 639-644.
Wongpit, P. (2011). Export performance, comparative advantage and factors determining comparative advantage of manufacturing industries in Thailand. National University of Laos.
Yee, L. S., WaiMun, H., Zhengyi, T., Ying, L. J., & Xin, K. K. (2016). Determinants of export: Empirical study in Malaysia. Journal of International Business and Economics, 4(1), 61-75.
Akapler, E., & Shamadeen, B. (2017). The Role of Net Export on Economic Growth in United States of America. Journal of Applied Economic Sciences, 12(3).
Al-Edary, A. M., & Al-Shamri, M. S. (2013). The Impact of economic openness degree on GDP growth in Malaysia and some neighboring countries for the period 1990-2010. International Journal of Education and Research, 1(4), 1-22.
Aluthge, C., Jibir, A., & Abdu, M. (2021). Impact of government expenditure on economic growth in Nigeria, 1970-2019. CBN Journal of Applied Statistics, 12(1), 139-174.
Behera, J. (2014). Inflation and its impact on economic growth: Evidence from six South Asian countries. Journal of Economics and Sustainable Development, 5(7), 145-154.
Bhavan, T. (2016). The determinants of export performance: the case of Sri Lanka. International Research Journal of Social Sciences, 5(8), 8-13.
Bibi, S., Ahmad, S. T., & Rashid, H. (2014). Impact of trade openness, FDI, exchange rate and inflation on economic growth: A case study of Pakistan. International Journal of Accounting and Financial Reporting, 4(2), 236.
Blavasciunaite, D., Garsviene, L., & Matuzeviciute, K. (2020). Trade balance effects on economic growth: Evidence from European Union Countries. Economies, 8(3), 54.
Budha, B. B. (2014). The role of expenditure components in Nepal’s import from India. South Asia Economic Journal, 15(1), 37-54.
Çakmak, U., Gökçe, A., & Çakmak, Ö. A. (2016). The key determinants of the import and policy recommendations for Turkish economy. Journal of Economics and Sustainable Development, 7(6), 96-103.
Chani, M. I., Pervaiz, Z., & Chaudhary, A. R. (2011). Determination of Import Demand in Pakistan: The Role of Expenditure Components. Theoretical & applied economics, 18(8).
Chirathivat, Suthiphand. (2002). ASEAN-China Free Trade Area Bacground, implications and Future Development. Journal of Asian Economics 13 (2002) 671-686.
Colander, David C. (2020). Microeconomics. The McGraw-Hill Series In Economics. McGraw-Hill Education
Dornbusch, Rudiger and Stanley Fischer, Richard Startz (2011). Macroeconomics-McGraw-Hill Education
Ekanayake, N. (2016). Determinants of external demand for textiles and garments of Sri Lanka. Staff Studies, 43(1-2).
Fang, Zheng, Bihong Huang & Zhuoxiang Yang. (2018). Trade openness and the environmental Kuznets curve Evidence from Chinese cities. ge. World Economy 1–28. wileyonlinelibrary.com/journal/twec
Galebotswe, O., & Andrias, T. (2011). Are devaluations contractionary in small import-dependent economies? Evidence from Botswana. Botswana Journal of Economics, 8(12), 86-98.
Grubaugh, S. G. (2015). Economic growth and growth in human development. Applied Econometrics and International Development, 15(2), 5-16.
Hamoudi, Mustafa El. & Nagmi Aimer. (2017). The Impact of Foreign Direct Investment on Economic Growth in Libya. International Journal of English Literature and Social Sciences (IJELS). Vol-2, Issue-6, Nov - Dec, 2017. https://dx.doi.org/10.22161/ijels.2.6.22
Hasnul, A. G. (2015). The effects of government expenditure on economic growth: the case of Malaysia.
Hobbs, S., Paparas, D., & E AboElsoud, M. (2021). Does foreign direct investment and trade promote economic growth? Evidence from Albania. Economies, 9(1), 1.
Ibrahim, A. A. A., & Ahmed, E. M. (2017). The determinants of aggregate demand function of Sudan. Business and Economics Journal, 8(3), 1-7.
Itakura, Ken. (2014) Impact of liberalization and improved connectivity and facilitation in ASEAN. http://dx.doi.org/10.1016/j.asieco.2014.09.002 Journal of Asian Economics.
Jiang, W. (2014). The effect of RMB exchange rate volatility on import and export trade in China. International Journal of Academic Research in Business and Social Sciences, 4(1), 615.
Jilenga, M. T., Xu, H., & Gondje-Dacka, I. M. (2016). The impact of external debt and foreign direct investment on economic growth: Empirical evidence from Tanzania. International Journal of Financial Research, 7(2), 154-162.
Kearl, J.R., Scott, & Foresman. (1989). Contemporary Economics, Company. United States of America.
Koojaroenprasit, S. (2012). The impact of foreign direct investment on economic growth: A case study of South Korea. International Journal of Business and Social Science, 3(21).
Kryeziu, N., & Durguti, E. A. (2019). The impact of inflation on economic growth: The case of Eurozone. International Journal of Finance & Banking Studies (2147-4486), 8(1), 01-09.
Lipsey., & Chrystal. (2011). Economics. Oxford University Press, Inc., United States of America.
Makhlouf, Y., Kellard, N. M., & Vinogradov, D. (2015). Trade openness, export diversification, and political regimes. Economics Letters, 136, 25-27.
Malefane, M. R. (2020). Trade openness and economic growth in Botswana: Evidence from cointegration and error-correction modelling. Cogent Economics & Finance, 8(1), 1783878.
Mankiw, N. G., Quah, W. & Wilson, P. (2008). Principles of Economics : An Asian Editition. Cengage Learning Asia Pte Ltd., Singapore.
Malik, S., & Chaudhary, A. R. (2012). The structure and behavior of Pakistan's imports from selected Asian countries: An application of gravity model. Pakistan Journal of Commerce and Social Sciences (PJCSS), 6(1), 53-66.
Mehrara, M., & Firouzjaee, B. A. (2011). Granger causality relationship between export growth and GDP growth in developing countries: Panel cointegration approach. International Journal of Humanities and Social Science, 1(16), 223-231.
McConnell, C. R., Brue, S. L., & Flynn, S. M. (2012). Economics: Principles, problems, and policies. McGraw-Hill, Companies, Inc., United States of America.
Mihaela, Simionescu; Lazányi Kornélia; Sopková Gabriela; Dobeš Kamil; Balcerzak Adam P. (2017). Determinants of Economic Growth in V4 Countries and Romania. Journal of Competitiveness.oai:publikace.k.utb.cz:10563/1007088
Minniti, Antonio and Carmelo P.P. (2011). Trade Interation and Regional Disparity in A Model of Scale-Invariant Growth. Regional Science and Urban Economics 41 (2011) 20-31. www. elsevier.com/locate/regec
Moudatsou, A. (2003). Foreign direct investment and economic growth in the European Union. Journal of Economic Integration, 689-707
Mukit, M. M. H. (2020). An econometric analysis of the macroeconomic determinants impact of gross domestic product (GDP) in Bangladesh. Atlantic Review of Economics: Revista Atlántica de Economía, 3(2), 3.
Mwakanemela, K. (2014). Impact of FDI inflows, trade openness and inflation on the manufacturing export performance of Tanzania: An econometric study. International Journal of Academic Research in Economics and Management Sciences, 3(5), 151.
Narayan, S., & Narayan, P. K. (2004). Determinants of demand for Fiji's exports: an empirical investigation. The Developing Economies, 42(1), 95-112.
Nduka, E. K., Chukwu, J. O., Ugbor, K. I., & Nwakaire, O. N. (2013). Trade openness and economic growth: A comparative analysis of the pre and post structural adjustment programme (SAP) periods in Nigeria. Asian Journal of Business and Economics, 3(3.4), 1-12.
Nguyen, H. (2014). Determinants of Vietnam's Exports: Application of the Gravity Model. Available at SSRN 2475781.
Nteegah, A., & Mansi, N. (2017). Analysis of factors influencing import demand in Nigeria. West African Journal of Industrial and Academic Research, 17(1), 88-100.
Nyeadi, J. D., Atiga, O., & Atogenzoya, C. A. (2014). The impact of exchange rate movement on export: Empirical evidence from Ghana. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(3), 41-48.
Oladele, M. F., Mah, G., & Mongale, I. (2017). The role of government spending on economic growth in a developing country.
Olubokun, S., Ayooluwade, E., & Fawehinmi, F. O. (2016). Government expenditure, inflation rate and economic growth in Nigeria (1981-2013): A vector autoregressive approach. Romanian Journal of Fiscal Policy (RJFP), 7(1), 1-12.
Potelwa, Y., Lubinga, M. H., & Ntshangase, T. (2016). Factors influencing the growth of South Africa's agricultural exports to world markets. European Scientific Journal (2016), Edition, 12.
Rijal, A., Koshal, R. K., & Jung, C. (2000). Determinants of Nepalese imports. Journal of Asian Economics, 11(3), 347-354.
Rizavi, S. S., Khan, M. K., & Mustafa, S. H. (2020). Openness and growth in South Asia. South Asian Studies, 25(2).
Samuelson, P. A., & William. D. N. (2010). Economics. Nineteenth Edition, McGraw-Hill, Inc., United States of America.
Tabassum, U., Nazeer, M., & Siddiqui, A. A. (2012). Impact of FDI on import demand and export supply functions of Pakistan: An econometric approach. Journal of Basic & Applied Sciences, 8(1), 151-159.
Tarawalie, A. B., & Conteh, M. (2021). The Determinants of Export Performance in a Small Open Economy: The Case of Sierra Leone. International Journal of Economics, Finance and Management Sciences, 9(1), 1.
Majeed, M. Tariq & Eatzaz A. (2006). Determinants of export in developing countries. The Pakistan Review, 45(4), 1265-1276.
Tomar, R. S., & Tomar, D. S. (2014). Selected Macro–Economic Variables and its Impact on Chinese and Indian Exports. IOSR Journal of Business and Management (IOSR-JBM), 16(3), 01-08.
Uddin, H., & Khanam, M. J. (2017). Import, export and economic growth: the case of lower income country. Journal of Business and Management, 19(1), 37-42.
Ullah, F., & Rauf, A. (2013). Impacts of macroeconomic variables on economic growth: A panel data analysis of selected Asian countries. International Journal of Information, Business and Management, 5(2), 4.
Uysal, O., & Mohamoud, A. S. (2018). Determinants of export performance in East Africa countries. Chinese Business Review, 17(4), 168-178.
Uzunoz, M., & Akcay, Y. (2009). Factors affecting the import demand of wheat in Turkey. Bulgarian Journal of Agricultural Science, 15(1), 60-66.
Wang, Y., Wang, L., & Li, Z. (2020). Dynamic Analysis of China's Imported Raw Milk Powder Consumption. Sustainability, 12(4), 1542.
Wildan, M. A., Imron, M. A., Siswati, E., & Rosyafah, S. (2020). Macroeconomic Factors Affecting Natural Gas Export Management. International Journal of Energy Economics and Policy, 11(1), 639-644.
Wongpit, P. (2011). Export performance, comparative advantage and factors determining comparative advantage of manufacturing industries in Thailand. National University of Laos.
Yee, L. S., WaiMun, H., Zhengyi, T., Ying, L. J., & Xin, K. K. (2016). Determinants of export: Empirical study in Malaysia. Journal of International Business and Economics, 4(1), 61-75.