The Relationship between Gross Domestic Product, Foreign Direct Investments, Inflation Rate and Unemployment in Selected ASEAN Countries

Mohamad Azlan bin Mohamed Asri; Bayu Taufiq Possumah; Grida Saktian Laksito

doi:10.56225/jmsc.v1i2.131

Authors

Mohamad Azlan bin Mohamed Asri Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu, Malaysia
Bayu Taufiq Possumah Institut Agama Islam Tazkia, Bogor, Indonesia
Grida Saktian Laksito Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu, Malaysia

DOI:

https://doi.org/10.56225/jmsc.v1i2.131

Keywords:

gross domestic product, foreign direct investments, inflation rate, unemployment, selected ASEAN countries

Abstract

Unemployment is one of the significant challenges faced by most developing countries, especially in ASEAN. This study aims to investigate the relationship between gross domestic product, foreign direct investment, inflation rate and unemployment in selected ASEAN countries. The panel data collected from the World Bank covering the period of 1980-2017 for Malaysia, Indonesia and Thailand. The data were analysed using static panel regression. The results of this study showed that Method Random Effect Model (REM) is more appropriate and that gross domestic product has a negative relationship with unemployment. Further, foreign direct investment and the inflation rate positively correlate with unemployment in Malaysia, Indonesia and Thailand. The overall findings of this study can guide policymakers to consider the unemployment fluctuations faced by ASEAN and establish policies to realise ASEAN Community.

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