Published date:Jan 24 2024

Journal Title: KnE Social Sciences

Issue title: The 6th International Research Conference on Economics and Business (6th IRCEB)

Pages:767–779

DOI: 10.18502/kss.v9i4.15119

Firsty Ramadhona Amalia Lubisfirsty.ramadhona@ep.uad.ac.idDepartment of Economy Development, Faculty of Economics and Business, Ahmad Dahlan University

Eva YovandaDepartment of Economy Development, Faculty of Economics and Business, Ahmad Dahlan University

Lisa DamayantiDepartment of Economy Development, Faculty of Economics and Business, Ahmad Dahlan University

Nunung Zahrotul HayatDepartment of Economy Development, Faculty of Economics and Business, Ahmad Dahlan University

Nurul Azizzah AzzakiyyahDepartment of Economy Development, Faculty of Economics and Business, Ahmad Dahlan University

Foreign direct investment (FDI) is an important factor in the development of a country and plays a crucial role in the growth and development of a country’s economy. FDI can be a source of capital in developing countries to help fund various sectors that are underfunded, this FDI also creates many new jobs so that the unemployment rate can be reduced. The entry of foreign investment is usually accompanied by technology transfer. One of the areas targeted by investors is the member countries of the Asia Pacific Economic Cooperation (APEC). This study aims to determine the effect of inflation, interest rates, and trade openness on FDI (case studies in five APEC member countries, namely Australia, Japan, Singapore, Brunei Darussalam, and Indonesia, period 2012-2019). The analytical method used in this study is the panel data regression analysis method with the seemingly unrelated regression (SUR) model using STATA 16 software for data regression and Eviews 10 to test stationary data. The stationary test of the data in this study uses the Augmented Dickey–Fuller (ADF) method at the first difference because the data level is not stationary. The results of research conducted using the SUR Model show that inflation has a negative and significant effect on FDI, interest rates have a positive and significant effect on FDI, and trade openness has a significant and negative effect on FDI.

Keywords: foreign direct investment, inflation, interest rates, seemingly unrelated regression, trade openness

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