Determinants of Private Investment and The Effects on Economic Growth in Indonesia

Suhendra, Indra; Anwar, Cep Jandi

doi:10.7603/s40706-014-0028-4

Cited by 16 publications

(16 citation statements)

References 11 publications

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“…As such, the economy needs to maintain investment availability as it becomes a funding source to develop industry and grow the economy. This view is supported by Nordin et al (2014) who confirmed that FDI's important contribution to economic growth is the availability of capital and transfer of technology, and by Suhendra and Anwar (2014) who found that investment has a positive and significant impact on economic growth. These three arguments are the foundations of this research.…”

Section: Introductionmentioning

confidence: 87%

The Impact of Foreign Direct Investment, Labour Force, and External Debt on Economic Growth in Indonesia and Malaysia

Cahyadin

Sarmidi²

2019

JEM

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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.

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Section: Introductionmentioning

confidence: 87%

The Impact of Foreign Direct Investment, Labour Force, and External Debt on Economic Growth in Indonesia and Malaysia

Cahyadin

Sarmidi²

2019

JEM

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“…Ultimately, it serves as a disincentive to private investment. Badawi (2004), Hassan and Salim (2011), Augustine (2014), and Suhendra and Anwar (2014) provide similar results for Sudan, Bangladesh, Indonesia and Ghana, respectively.…”

Section: Discussionmentioning

confidence: 81%

“…The negative inflation-private-investment relationship confirms evidence provided by Akpalu (2002), Naa-Idar et al (2012) and Augustine (2014) for Ghana. However, the long-run results for interest rate contradicts that of Badawi (2004), Hassan (2011), Augustine (2014 and Suhendra and Anwar (2014) for Sudan, Bangladesh, Indonesia and Ghana respectively.…”

Section: Long-run Modelmentioning

confidence: 74%

“…The study makes use of the Johansen multivariate cointegration technique and the error correction model, as well as data for the period 1990-2009. Using the Ordinary Least Square (OLS) estimation technique, Suhendra and Anwar (2014) shows that GDP growth rate, public investment, credit availability to the private sector and exchange rate stimulate private investment in Indonesia. The paper further indicates however that interest rate and inflation had negative effect on private investment in Indonesia.…”

Section: Time-series Studiesmentioning

confidence: 99%

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Democracy, Globalization and Private Investment in Ghana

Obeng

Akoto

Acquah³

2017

Global Business Review

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The paper examines the effect of democracy and globalization on private investment in Ghana for the period 1980-2012, using the Autoregressive Distributed Lag (ARDL) bounds test for cointegration and the Error Correction Model (ECM). Two models are used. In Model 1, democracy is proxy by an index for institutional quality (Polity2) while Model 2 uses an index for civil liberties as proxy for democracy. The results for model 1 shows globalization and public investment increase private investment while exchange rate volatility and trade openness decrease private investment in both the long-and short-run. In addition, economic growth and interest rate reduce private investment in the short-run. In the case of model 2, credit to the private sector and public investment increase private investment while exchange rate volatility and trade openness decrease private investment in both the long-and short-run. Finally, economic growth and interest rate reduce private investment in the short-run. The findings and policy recommendations of the paper provide vital information for policy implementation in Ghana.Keywords: democracy, globalization, private investment, ARDL, ECM 1 Corresponding Author: Department of Economics, Kwame Nkrumah University of Science and Technology (KNUST), Kumasi, Ghana, Email: sammyatom2007@yahoo.com Tel. +233 (0) 246 219421 2 Department of Economics, Kwame Nkrumah University of Science and Technology (KNUST), Kumasi, Ghana, Email: akotol@ymail.com 3 Records and Archives Department, National Investment Bank (N.I.B.) Ltd., P.O. Box GP 3726, Accra. Email: feliciaacquah88@yahoo.com IntroductionPrivate investment is considered the engine of economic growth (Frimpong and Marbuah, 2010). This is because the private sector is deemed relatively more efficient in allocating resources compared to the public sector. In addition, there is less wastage in the private sector. Also, due to constant monitoring and evaluation, productivity in the private sector is assured. Finally, competition arises from the desire to maximize profits which eventually leads to increased consumer welfare (see Nickell, 1996;Porter, 1998Porter, , 2000Rodrik, D, 2006). It is therefore not surprising that most notable industrializations in history have been led by the private sector (McDade and Spring, 2005).Private investment is mostly viewed to be determined by factors such as interest rates, exchange rate volatility, economic growth, public investment, inflation, trade openness, among others. Recently, however, democracy and globalization are becoming important determinants of private investment. Interestingly, it is easier to assume and argue a positive effect of democracy on private investment even though this is more likely to be a desired outcome which may differ from evidence provided by an empirical investigation of the relationship between democracy and private investment. However, the effect of globalization on private investment largely remains unclear as it can be positive or negative (see Mamman et al., 2009). It ...

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“…Most relevant and useful studies for this study are included. Suhendra and Anwar (2014), studied the effect of private investment and public investment in Indonesia GDP from 1990-2011. Using Ordinary least square OLS they found out that government investment, economic growth, credit available for private investment, and the exchange rate have a positive and significant impact on private investment.…”

Section: Literature Reviewmentioning

confidence: 99%

Private Sector Investment and Economic Growth in Palestine

Abdaljawwad¹,

Sarmidi

2018

UMRAN

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This study examines the impact of private sector investment on economic growth in Palestine using quarterly time series data from 1990-2015. Multiple regression and co-integration methods are employed to analyse the data. The objectives of this study are to analyse the trends of private investment and economic growth in Palestine from 1990-2015 and to examine the impact of private sector investment on economic. Being a time series data, to avoid spurious regression results, the first step is to test for the stationarity of the data by using Augmented Dickey-Fuller unit root test. Then ordinary least square (OLS) regression technique is used to estimate of each independent variable effect on the dependent variable. Test the stationary of the error term is done to test the long run co-integration among variables. The result of stationarity and normality test will reveal that the model is fairly well specified and could be used for policy analysis or not. The co-integration test result will indicate that private sector investment and economic growth have a long run significant effect on one another. The unit root tests, which conducted, confirm that variables are stationary in first difference and the co-integration tests also confirm the existence of long term relationship between the variables. The findings of the study concluded that there exist a short-run and long run relationship between private sector investment and economic growth in Palestine. This study recommends the Palestinian government to promote and encourage both domestic and foreign direct investment. The investment policy should be more transparent, attractive and competitive

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Determinants of Private Investment and The Effects on Economic Growth in Indonesia

Cited by 16 publications

References 11 publications

The Impact of Foreign Direct Investment, Labour Force, and External Debt on Economic Growth in Indonesia and Malaysia

The Impact of Foreign Direct Investment, Labour Force, and External Debt on Economic Growth in Indonesia and Malaysia

Democracy, Globalization and Private Investment in Ghana

Private Sector Investment and Economic Growth in Palestine

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