FDI, Political Risk, and Government Policy
Investment will create a multiplier effect for the economy, especially investments from abroad which may also encourage the technology spillover and innovation process. Political risk and government investment policy are two factors considered by investors in investing. This research aimed to determine the effect of these two factors on foreign direct investment (FDI) in Indonesia. This research used data of FDI in Indonesia in 2010-2017, during which there were three changes in foreign direct investment policies in Indonesia and one political year. Using panel data analysis, this research found that government policy in revising the negative investment list had no significant effect on FDI flows in Indonesia. It can be seen that the sector effect experiencing a tightening of foreign asset ownership limitation on FDI was greater than the sector effect experiencing loosening of asset ownership limitation by foreign parties. In addition, this research found that political risk had no significant effect on FDI in Indonesia.
Keywords: FDI, Politics, Policy.
Reference is written using APA Style method, arranged alphabetically. Reference can be sourced from: journal, books, articles or electronic publications, magazines, guides, symposia, papers, laws, government regulations, thesis, dissertation, and newspapers.
Adiningsih,Ika., R, Anwar., Wijaya and Wardani. (2008). Satu Dekade Pasca-Krisis Indonesia: Badai Pasti Berlalu?. Yogyakarta: Kanisius Publisher.
Agarwal. (2007). Political Risk and the Internationalization of Firms: An Empirical Study of Canadian-Based Export and FDI Firms. Canadian Journal of Administrative Sciences, 67(2): 398-412.
Aguiar and Indaqua. (2012). Foreign Direct Investment and Home Country Political Risk: The Case of Brazil. Latin American Research Review, 47(2):144-162.
Chen, C-M. (2010). FDI and Local Economic Development: The Case of Taiwanese Investment in Kunshan. European Planning Studies, 18(2): 456-467.
Drahokoupil, J. (2008). The Investment-Promotion Machines: The Politics of Foreign Direct Investment Promotion in Central and Eastern Europe. Europe-Asia Studies, 60(2): 197 – 225.
Fails, M.D. (2012). Inequality, Institutions, and the Risks to Foreign Investment. International Studies Quarterly, 54(3): 516-529.
Filipe, J. A., Ferreira, M. A. M., Coelho, M. P., and Moura, D. (2012). FDI Political Risks: The New International Context. International Journal of Latest Trends in Finance and Economic Sciences, 2(2): 117-124.
Friedrich, S., and Bruno, S. F. (1985). Economic and Political Determinants of Foreign Direct Investment. World Development, 13(2):161-175.
Harms, P. (2002). Political Risk and Equity Investment in Developing Countries. Applied Economics Letters, 9(6): 377-380.
Holmén, M., and Högfeldt, P. (2009). Pyramidal Discounts: Tunneling or Overinvestment? International Review of Finance, 9(2):133–175.
Jensen, N. (2008). Political Risk, Democratic Institutions, and Foreign Direct Investment. The Journal of Politics, 70 (4): 1040–1052.
Jiménez, A. (2011). Political Risk as a Determinant of Southern European FDI in Neighboring Developing Countries. Emerging Markets Finance and Trade, 47(4): 59-74.
Juliussen, Siren S., and Fløysand, A. (2010). Foreign Direct Investment, Local Conditions and Development: Crossing from Dependency to Progress in Peripheral Kuressaare, Estonia. Norsk Geografisk Tidsskrift - Norwegian Journal of Geography, 64(3): 142-151.
Lee, Y., and Cho, M. (2016). Does Control-Ownership Disparity Matter to Foreign Investors in Korea? International Review of Economics and Finance, 44(3): 219-231.
Lim, J.H., Dehning, B., Richardson, V.J., and Smith, R.E. (2011). A Meta-Analysis of the Effects of IT Investment on Firm Financial Performance. Journal of Information Systems, 25(2): 145–169.
Matthias, B., and Hefeker, C. (2007). Political Risk, Institutions and Foreign Direct Investment. European Journal of Political Economy, 23(2): 397–415.
Mario, L. (1979). Does Political Instability in Developing Countries Affect Foreign Investment Flow? An Empirical Examination. Management International Review, 19(3): 59-68.
Okizlerli, A., and Ülkü, C. H. (2012). Innovative Methods in Assessing Political Risk for Business Internationalization. Research in International Business and Finance, 23(2): 144-156.
Tihanyi, Alan, E., Ellstrand, L., and Johnson, J.L. (2002). Board Structure and International Political Risk. The Academy of Management Journal, 45(4):769-777.
Tambunan, T. (2006). Iklim Investasi di Indonesia: Masalah, Tantangan dan Potensi. http://www.kadin-indonesia.or.id/enm/images/dokumen/KADIN98-1579-02032007.pdf (accessed in March 29, 2018).
Wei, K., Yao, S., and Liu, A., (2008). Foreign Direct Investment and Regional Inequality in China. UNU-WIDER. (Research Paper).
- There are currently no refbacks.
Indexed by :
This work is licensed under a Creative Commons Attribution 4.0 International License.