Macroeconomics scenario reflect the Foreign Direct Investment (FDI) in ASEAN-3 countries

Abstract

Foreign direct investment (FDI) inflows are one of the main instruments for developing countries, especially ASEAN-3. The influx of FDI is an important motivation in driving economic growth through increased productivity. The diversity of empirical results does not provide confirmation of the determinants of FDI inflows in the host country. This study examines macroeconomic scenarios that reflect the FDI inflows. This study used annual time series data from 1980-2019 using Autoregressive Distributed Lag (ARDL) analysis. Empirical results show that economic growth and domestic investment are the main factors for the three countries studied where it shows a significant relationship with FDI inflows. This is because the economic environment is a driving factor in FDI inflows into a country. The overall findings of the study can assist policymakers in focusing on the stability of macroeconomic indicators as a driver of ASEAN-3 FDI inflows and formulate a comprehensive investment policy in achieving the ASEAN 2025 vision.