The Effect of Inward Foreign Direct Investment and Information and Communication Technology on Economic Growth in Indonesia

Abstract

Inward foreign direct investment indirectly or directly affect economic growth through various means. For instance, the direct effect might be attributed to production factors, while information and communication technology changes are linked to the indirect effect. This study aimed to examine the impact of direct and indirect inward foreign investment and information and communication technology on Indonesian economic growth. The data was collected from the annual time series from 1994 to 2019. Furthermore, an autoregressive distributed lag model was used to analyze the data and provide accurate conclusions. The results showed that short-term and long-term inward foreign direct investment and information and communication technology significantly affects Indonesian economic growth. In the long term, the direct and indirect effects of inward foreign direct investment are negative and positive, respectively. However, the long-term effect of information and communication technology on economic growth is positive.