The Effect of Foreign Direct Investment and Foreign Exchange Reserves on Economic Growth in ASEAN Countries

M. Arief Bukhari Saraan; Suriani Suriani; Muhammad Nasir

doi:10.56225/ijfeb.v2i1.143

Authors

M. Arief Bukhari Saraan Department of Economics, Faculty of Economics and Business, Universitas Syiah Kuala, Darussalam, Banda Aceh, Indonesia
Suriani Suriani Department of Economics, Faculty of Economic and Business, Universitas Syiah Kuala
Muhammad Nasir Department of Economics, Faculty of Economics and Business, Universitas Syiah Kuala, Darussalam, Banda Aceh, Indonesia

DOI:

https://doi.org/10.56225/ijfeb.v2i1.143

Keywords:

foreign direct investment, foreign exchange reserves, economic growth

Abstract

This study aims to examine the effect of foreign direct investment (FDI) and foreign exchange reserves on economic growth in ASEAN countries during the 1995-2021 period. Estimation results on modeling Autoregressive Distributed Lag (ARDL) show that in the long run foreign exchange reserves have a significant positive relationship with economic growth whereas FDI in the long run has no effect on economic growth. The short-run estimation results show that foreign exchange reserves have no effect on economic growth, while FDI in the short run has a significant positive relationship with economic growth. FDI and foreign exchange reserves need to be increased in ASEAN countries to encourage economic growth.

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