The Effect of Government Quality on Foreign Investment: Empirical Study on ASEAN Developing Countries
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Keywords:
Governance Quality, Foreign Direct Investment (FDI), World Governance Indicators (WGI)
Abstract
Introduction: Many ASEAN nations face governance challenges and high corruption, especially Cambodia, Myanmar, and Laos, categorizing most as developing countries. Foreign capital inflows are essential for economic growth, requiring governments to create favorable investment climates. While good governance can attract foreign direct investment (FDI), this relationship is inconsistent. This study aims to determine how government quality affects foreign investment (Foreign Direct Investment). Research Methods: In this study, secondary data is used using quantitative methods. Developing countries in ASEAN are used as samples in this study. Results: This study provides results that political stability and legal regulations have a significant positive impact on Foreign Direct Investment, while corruption control, government effectiveness, and voting rights and accountability hurt FDI. Conclusion: The study has three fundamental implications: it enhances understanding of government quality's impact on foreign investment in developing ASEAN countries, serves as a reference for further research, and offers insights for policymakers to improve regulations and investment climates.
References
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Alfaro, Laura, Sebnem Kalemli-Ozcan, dan Vadym Volosovych. “Capital Flows in a Globalized World: The Role of Policies and Institutions.” National Bureau of Economic Research, 2007: 19-71.
Altinkemer, Melike. “Capital Flows: The Turkish Case.” Central Bank of The Republic of Turkey, Research Department, Discussion Paper No 9601, 1995: 9-32.
Avianti, Nicky Alfita. “Pengaruh Kualitas Pemerintahan Terhadap Tingkat Penanaman Modal Asing di Negara-Negara ASEAN Periode 2002-2008.” Tesis, Program Studi Magister Manajemen, Universitas Diponegoro, 2010.
Berkel, Rik Van, dan Vando Borghi. “Introduction: The Governance of Activation.” Social Policy and Society, Vol. 7, No. 3, 2008: 331-340.
Berument, Hakan, dan N. Nergiz Dincer. “Do Capital Flows Improve Macroeconomic Performance in Emerging Market? The Turkish Expirience.” Emerging Markets Finance and Trade, Vol. 40, No. 4, 2004: 20-32.
Boediono. Teori Pertumbuhan Ekonomi. Yogyakarta: BPFE UGM, 1992.
Boettke, Peter, dan J. Robert Subrick. “Rule of Law, Development, and Human Capabilities.” Supreme Court Economic Review 10, 2003: 109-126.
Bosworth, Barry P., dan Susan M. Collins. “Capital Flows to Developing Economies: Implications for Saving and Investment.” Brookings Papers on Economic Activity, 1999: 143-180.
Brooks, Douglas H., Emma Xiaoqin Fan, dan Lea R. Sumulong. “Brooks, D., Fan, E. X., & Sumolong, L. R. (2003). Foreign Direct Investment in Developing Asia: Trends, Effect, and Likely Issues for the Forthcoming WTO Negotiation.” Asian Development Bank, ERD Working Paper No. 38., 2003.
Buchanan, Bonnie G., Quan V. Le, dan Meenakshi Rishi. “Foreign Direct Investment and Institutional Quality: Some Empirical Evidence.” International Review of Financial Analysis 21, 2012: 81-89.
Buthe, Tim, dan Helen V. Milner. “The Politics of Foreign Direct Investment into Developing Countries: Increase FDI Trough International Trade Agreement?” American Journal of Political Science, Vol. 52, No. 4, 2008: 741-762.
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Calvo, Guillermo A. “Calvo, G. (1998). Capital Flow and Capital Market Crises: The Simple Economic of Sudden Stops.” Journal of Applied Economics, Vol. 1, No. 1, 1998: 35-54.
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Honig, Adam. “Do Improvements in Government Quality Necessarily Reduce the Incidence of Sudden Stops?” Department of Economics Amherst College. 2006.
Huyen, Le Hoang Ba. “Determinant of The Factors Affecting Foreign Direct Investment (FDI) Flow to Thanh Hoa Province in Vietnam.” Procedia - Social and Behavioral Sciences 172, 2015: 26-33.
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Kamus Besar Bahasa Indonesia. Investasi. 6 Juli 2018.
Kaufmann, Daniel, Asrt Kraay, dan Massimo Mastruzzi. “The Worldwide Governance Indicators: Methodology and Analytical Issues.” Draft Policy Research Working Paper. 2010. 1-27.
Kuncoro, Mudrajad. Manajemen Keuangan Internasional Pengantar Ekonomi dan Bisnis Global, Edisi Pertama. Yogyakarta: BPFE, 1996.
Kurniasih, E. P. (2020). Perkembangan Investasi Asing di Negara ASEAN. Prosiding Seminar Akademik Tahunan Ilmu Ekonomi Dan Studi Pembangunan 2020, 362–370.
Kuzmina, Olga, Natalya Volchkova, dan Tatiana Zueva. “Foreign Direct Investment and Governance Quality in Russia.” Journal of Comparative Economics 42, 2014: 874-891.
Lothian, James R. “Institutions, Capital Flows and Financial Integration.” Journal of International Money and Finance xx, 2006: 1-12.
Loungani, Prakash, dan Assaf Razin. “How Beneficial is Foreign Direct Investment for Developing Countries.” Financial and Development, a quarterly magazine of the IMF, Vol. 38, No. 2. Juni 2001. https://www.imf.org/external/pubs/ft/fandd/2001/06/loungani.htm (diakses Juni 12, 2017).
Madura, Jeff, dan Roland Fox. International Financial Management. Boston: Cengange Learning, 2011.
Mai, Pham Hoang. “Regional Economic Development and Foreign Direct Investment Flows in Vietnam, 1988-98.” Journal of the Asia Pacific Economy, Vol. 7, No. 2, 2002: 182-202.
Meon, Pierre-Guillaume, dan Khalid Sekkat. “FDI Waves, Waves of Neglect of Political Risk.” Centre Emile Bernheim Working Paper, 2010: 10/004.
Meon, Pierre-Guillaume, dan Laurent Weill. “Is Corruption an Efficient Grease?” BOFIT Discussion Papers 20, 2008.
Mody, Ashoka, dan Antu Panini Murshid. “Growing Up With Capital Flows.” Journal of International Economics, 2004: 1-31.
Olayiwola, Kolawole, dan Dipo T. Busari. “Macroeconomic Stability or Good Institutions of Governance, What is Africa Getting Wrong?” Department of Economics and Development Studies Seminar Series. Ota: Covenant University, 2008.
Rajan, Ramkishen S., Sunil Rongala, dan Ramya Ghosh. “Attracting Foreign Direct Investment (FDI) to India.” World Scientific Press, 2008.
Ralhan, Mukesh. “Determinants of Capital Flows: A Cross-Country Analysis.” Econometrics Working Paper, 2006: EWP0601.
Rothstein, Bo, dan Jan Teorell. “What is Quality of Government? A Theory of Impartial Political Institutions.” Quality of Government Paper Series, 2005: 2-34.
Samuelson, Paul A., dan William D. Nordhaus. Economics, Nineteenth Edition. United States: McGraw Hill International, 2010.
Sari, Dimas Novita. Pendapatan Per Kapita Indonesia Hanya Tempati Peringkat Kelima di Asia Tenggara. 7 Januari 2018. https://finansial.bisnis.com/read/20180107/9/723969/pendapatan-per-kapita-indonesia-hanya-tempati-peringkat-kelima-di-asia-tenggara. (diakses Agustus 3, 2018).
Sartono, Agus. Manajemen Keuangan Internasional, Edisi Pertama. Yogyakarta: BPFE-Yogyakarta, 2001.
Sekaran, Uma. Research Methods For Business: Metodologi Penelitian untuk Bisnis, Buku 1 Edisi 4. Dialihbahasakan oleh Kwan Men Yon. Jakarta: Salemba Empat, 2009.
Sukirno, Sadono. Makroekonomi Teori Pengantar, Edisi Ketiga. Jakarta: Raja Grafindo Persada, 2015.
Widarjono, Agus. Ekonometrika Pengantar dan Aplikasinya Disertai Panduan Eviews. Yogyakarta: UPP STIM YKPN, 2013.
Yustika, Ahmad Erani. Ekonomi Kelembagaan: Paradigma, Toeri, dan Kebijakan. Jakarta: Penerbit Erlangga, 201
Delfiyanti. (2017). Persetujuan Penanaman Modal Menyeluruh Asean (Acia) Dalam Rangka Liberalisasi Penanaman Modal Pada Masyarakat Ekonomi Asean. Jurnal Bina Mulia Hukum, 1(2), 177–188. https://doi.org/10.23920/jbmh.v1n2.17
Kurniasih, E. P. (2020). Perkembangan Investasi Asing di Negara ASEAN. Prosiding Seminar Akademik Tahunan Ilmu Ekonomi Dan Studi Pembangunan 2020, 362–370.
Laksono, V. B., Simanjuntak, T. R., & Fretes, C. H. J. de F. (2020). Dampak Perang Dagang Amerika Serikat-Cina Terhadap Pertumbuhan Investasi Asing Di Vietnam Tahun 2018-2019. Jurnal Cakrawala, 125–152.
Ahmed, Faisal, Rabah Arezki, dan Norbert Funke. “The Composition of Capital Flows: Is South Africa Different?” IMF Working Paper, 2005: WP/05/40.
Alfaro, Laura, Sebnem Kalemli-Ozcan, dan Vadym Volosovych. “Capital Flows in a Globalized World: The Role of Policies and Institutions.” National Bureau of Economic Research, 2007: 19-71.
Altinkemer, Melike. “Capital Flows: The Turkish Case.” Central Bank of The Republic of Turkey, Research Department, Discussion Paper No 9601, 1995: 9-32.
Avianti, Nicky Alfita. “Pengaruh Kualitas Pemerintahan Terhadap Tingkat Penanaman Modal Asing di Negara-Negara ASEAN Periode 2002-2008.” Tesis, Program Studi Magister Manajemen, Universitas Diponegoro, 2010.
Berkel, Rik Van, dan Vando Borghi. “Introduction: The Governance of Activation.” Social Policy and Society, Vol. 7, No. 3, 2008: 331-340.
Berument, Hakan, dan N. Nergiz Dincer. “Do Capital Flows Improve Macroeconomic Performance in Emerging Market? The Turkish Expirience.” Emerging Markets Finance and Trade, Vol. 40, No. 4, 2004: 20-32.
Boediono. Teori Pertumbuhan Ekonomi. Yogyakarta: BPFE UGM, 1992.
Boettke, Peter, dan J. Robert Subrick. “Rule of Law, Development, and Human Capabilities.” Supreme Court Economic Review 10, 2003: 109-126.
Bosworth, Barry P., dan Susan M. Collins. “Capital Flows to Developing Economies: Implications for Saving and Investment.” Brookings Papers on Economic Activity, 1999: 143-180.
Brooks, Douglas H., Emma Xiaoqin Fan, dan Lea R. Sumulong. “Brooks, D., Fan, E. X., & Sumolong, L. R. (2003). Foreign Direct Investment in Developing Asia: Trends, Effect, and Likely Issues for the Forthcoming WTO Negotiation.” Asian Development Bank, ERD Working Paper No. 38., 2003.
Buchanan, Bonnie G., Quan V. Le, dan Meenakshi Rishi. “Foreign Direct Investment and Institutional Quality: Some Empirical Evidence.” International Review of Financial Analysis 21, 2012: 81-89.
Buthe, Tim, dan Helen V. Milner. “The Politics of Foreign Direct Investment into Developing Countries: Increase FDI Trough International Trade Agreement?” American Journal of Political Science, Vol. 52, No. 4, 2008: 741-762.
Butler, Cormac. Mastering Value at Risk, a Step-by-Step Guide to Understanding and Applying VaR. FT Prentice Hall, 1999.
Calvo, Guillermo A. “Calvo, G. (1998). Capital Flow and Capital Market Crises: The Simple Economic of Sudden Stops.” Journal of Applied Economics, Vol. 1, No. 1, 1998: 35-54.
Dornbusch, Rudiger, dan Stanley Fischer. Macroeconomics, Sixth Edition. United States: McGraw Hill Education, 2005.
Gujarati, Damodar N., dan Dawn C. Porter. Basic Econometrics: Dasar-dasar Ekonometrika, Edisi 5 Buku 1. Dialihbahasakan oleh Eugenia Mardanugraha, Sita Wardhani, & Carlos Mangunsong. Jakarta: Salemba Empat, 2012.
Gujarati, Damodar N., dan Down C. Porter. Basic Econometrics: Dasar-Dasar Ekonometrika, Edisi 5 Buku 2. Dialihbahasakan oleh Raden Carlos Mangunsong. Jakarta: Salemba Empat, 2013.
Honig, Adam. “Do Improvements in Government Quality Necessarily Reduce the Incidence of Sudden Stops?” Department of Economics Amherst College. 2006.
Huyen, Le Hoang Ba. “Determinant of The Factors Affecting Foreign Direct Investment (FDI) Flow to Thanh Hoa Province in Vietnam.” Procedia - Social and Behavioral Sciences 172, 2015: 26-33.
International Monetary Fund. Country Composition of WEO Groups. 2008. https://www.imf.org/external/pubs/ft/weo/2008/02/weodata/groups.htm#ae (diakses September 26, 2018).
Kamus Besar Bahasa Indonesia. Investasi. 6 Juli 2018.
Kaufmann, Daniel, Asrt Kraay, dan Massimo Mastruzzi. “The Worldwide Governance Indicators: Methodology and Analytical Issues.” Draft Policy Research Working Paper. 2010. 1-27.
Kuncoro, Mudrajad. Manajemen Keuangan Internasional Pengantar Ekonomi dan Bisnis Global, Edisi Pertama. Yogyakarta: BPFE, 1996.
Kurniasih, E. P. (2020). Perkembangan Investasi Asing di Negara ASEAN. Prosiding Seminar Akademik Tahunan Ilmu Ekonomi Dan Studi Pembangunan 2020, 362–370.
Kuzmina, Olga, Natalya Volchkova, dan Tatiana Zueva. “Foreign Direct Investment and Governance Quality in Russia.” Journal of Comparative Economics 42, 2014: 874-891.
Lothian, James R. “Institutions, Capital Flows and Financial Integration.” Journal of International Money and Finance xx, 2006: 1-12.
Loungani, Prakash, dan Assaf Razin. “How Beneficial is Foreign Direct Investment for Developing Countries.” Financial and Development, a quarterly magazine of the IMF, Vol. 38, No. 2. Juni 2001. https://www.imf.org/external/pubs/ft/fandd/2001/06/loungani.htm (diakses Juni 12, 2017).
Madura, Jeff, dan Roland Fox. International Financial Management. Boston: Cengange Learning, 2011.
Mai, Pham Hoang. “Regional Economic Development and Foreign Direct Investment Flows in Vietnam, 1988-98.” Journal of the Asia Pacific Economy, Vol. 7, No. 2, 2002: 182-202.
Meon, Pierre-Guillaume, dan Khalid Sekkat. “FDI Waves, Waves of Neglect of Political Risk.” Centre Emile Bernheim Working Paper, 2010: 10/004.
Meon, Pierre-Guillaume, dan Laurent Weill. “Is Corruption an Efficient Grease?” BOFIT Discussion Papers 20, 2008.
Mody, Ashoka, dan Antu Panini Murshid. “Growing Up With Capital Flows.” Journal of International Economics, 2004: 1-31.
Olayiwola, Kolawole, dan Dipo T. Busari. “Macroeconomic Stability or Good Institutions of Governance, What is Africa Getting Wrong?” Department of Economics and Development Studies Seminar Series. Ota: Covenant University, 2008.
Rajan, Ramkishen S., Sunil Rongala, dan Ramya Ghosh. “Attracting Foreign Direct Investment (FDI) to India.” World Scientific Press, 2008.
Ralhan, Mukesh. “Determinants of Capital Flows: A Cross-Country Analysis.” Econometrics Working Paper, 2006: EWP0601.
Rothstein, Bo, dan Jan Teorell. “What is Quality of Government? A Theory of Impartial Political Institutions.” Quality of Government Paper Series, 2005: 2-34.
Samuelson, Paul A., dan William D. Nordhaus. Economics, Nineteenth Edition. United States: McGraw Hill International, 2010.
Sari, Dimas Novita. Pendapatan Per Kapita Indonesia Hanya Tempati Peringkat Kelima di Asia Tenggara. 7 Januari 2018. https://finansial.bisnis.com/read/20180107/9/723969/pendapatan-per-kapita-indonesia-hanya-tempati-peringkat-kelima-di-asia-tenggara. (diakses Agustus 3, 2018).
Sartono, Agus. Manajemen Keuangan Internasional, Edisi Pertama. Yogyakarta: BPFE-Yogyakarta, 2001.
Sekaran, Uma. Research Methods For Business: Metodologi Penelitian untuk Bisnis, Buku 1 Edisi 4. Dialihbahasakan oleh Kwan Men Yon. Jakarta: Salemba Empat, 2009.
Sukirno, Sadono. Makroekonomi Teori Pengantar, Edisi Ketiga. Jakarta: Raja Grafindo Persada, 2015.
Widarjono, Agus. Ekonometrika Pengantar dan Aplikasinya Disertai Panduan Eviews. Yogyakarta: UPP STIM YKPN, 2013.
Yustika, Ahmad Erani. Ekonomi Kelembagaan: Paradigma, Toeri, dan Kebijakan. Jakarta: Penerbit Erlangga, 201
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