Comparison of foreign direct investment inflows in Indonesia, Philippine and China: influence of economic growth / Shafikhul Afzal Husin

FDI in recent period has become the principal sources for external capital for many developing countries, particularly in Asia. This study focuses on the FDI and economic growth of three selected countries Indonesia, Philippine and China. The purpose of these studies is to examine the relationship between FDI and economic growth of each selected countries. The factor that has been analyzed are FDI inward as a dependent variable and the gross domestic product (GDP), trade balance and gross national income as the independent variable. The data employed in this study is yearly basis from 1986 until 2005 which is twenty years. This study used multiple regression analysis method which to determine the coefficient of determination (R-square) t-test and ANOVA f —test to predict the correlation and significant of the variables based on the result. Base on the results of each country, comparison have been make between country to examine which country that have influence higher FDI inflows. The Multiple Linear Regression has been used and the results showed economy variable (GDP, GNI and Trade balance) was significantly has correlation with foreign direct investment inflows in China and Philippines. Result shows that hypotheses 1 and 3 have been rejected due to statistically significant between economy variable (GDP, GNI and Trade balance) with foreign direct investment inflows. The beta from the findings explained the level of influence of the economy variable towards the foreign direct investment inflows. Hypothesis 2 accepted the null hypothesis, which mean that the economy variable can influence foreign investment but only significant on certain countries and it depends on the countries FDI policy rules and economy level. Further more, it is also suggested to future researcher to increase the historical data period of the study in order to get an accurate result. Besides, other researchers are also suggested to expand the scope of their study by using more economy variable such as exchange rate and inflation rate in to their calculation in order to obtain more accurate results.