Macroeconomic and Environmental Determinants of FDI in 6-ASEAN Countries: A Panel Analysis
DOI:
https://doi.org/10.12928/jampe.v5i2.15931Keywords:
Carbon emissions , Domestic credit, Economic growth, Energy consumption , Foreign Direct InvestmentAbstract
Foreign Direct Investment (FDI) plays an important role in promoting economic growth, technology transfer, employment creation, and regional economic integration in developing countries, particularly in ASEAN economies. However, despite the growing literature on FDI determinants, previous studies have generally examined macroeconomic, environmental, financial, and technological factors separately, resulting in limited understanding of their combined effects on FDI inflows, especially in the ASEAN context. This study offers a more integrated perspective by simultaneously incorporating economic growth, carbon emissions, domestic credit, technology, and energy consumption into a unified empirical framework using the Seemingly Unrelated Regression–Panel Corrected Standard Errors (SUR-PCSE) approach. The study analyzes panel data from six ASEAN countries: Cambodia, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. The results indicate that economic growth, domestic credit, and energy consumption have significant positive effects on FDI inflows, while carbon emissions negatively affect FDI. In contrast, technology does not have a statistically significant effect on FDI in the observed countries. These findings suggest that ASEAN economies still rely heavily on macroeconomic stability, financial development, and infrastructure readiness in attracting foreign investment, while environmental sustainability is becoming increasingly important in shaping investment decisions. This study contributes to the literature by providing a more comprehensive framework for analyzing FDI determinants in ASEAN countries and offers policy insights for strengthening sustainable investment competitiveness in developing economies.
References
References
A’yun, I. Q., Nguyen, T. T. H., Darsono, S. N. A. C., Pho, T. V., Khoirudin, R., & Lubis, F. R. A. (2026). Economic development and inequality in human development: The mediating roles of urbanisation, non-renewable energy consumption, economic complexity, and globalisation. Sustainable Chemistry One World, 10, 100220. https://doi.org/10.1016/j.scowo.2026.100220
A'yun, I. Q., & Khasanah, U. (2022). The impact of economic growth and trade openness on environmental degradation: Evidence from a panel of ASEAN countries. Jurnal Ekonomi & Studi Pembangunan, 23(1), 81–92. https://doi.org/10.18196/jesp.v23i1.13881
Adrian, M. A. (2023). Analysis Influence Activity Economy to Improvement Carbon Emissions : A Study Empirical Four ASEAN Countries. Journal Indonesian Economy, 12(2), 187–202. https://doi.org/10.52813/jei.v12i2.379
Anita, R. D., & Udjianto, D. W. (2024). Determinants of inclusive economic development: A fixed effect model approach. Journal of Asset Management and Public Economy, 3(1), 60–75. https://doi.org/10.12928/jampe.v3i1.9101
Ansari, M. G., & Sensarma, R. (2022). Does economic freedom influence the FDI–growth nexus in ASEAN economies? Journal of Asian Economic Integration, 4(2), 144–159. https://doi.org/10.1177/26316846221112228
Anwar, C. J., Suhendra , I., Imansyah, T., Zahara, V. M., & Chendrawan, T. S. (2023). GDP Growth and FDI Nexus in ASEAN-5 Countries: The Role of Macroeconomic Performances. Journal of Economics and Policy, 16 (1), 1–12. https://doi.org/10.15294/jejak.v16i1.37247
Ariyani, A. D., & Firmansyah, F. (2023). Determining factors of foreign direct investment in Emerging Market Asia: A panel data analysis (2005–2020). Optimum: Jurnal Ekonomi dan Pembangunan, 13(2). https://doi.org/10.12928/optimum.v13i2.8535
ASEAN Secretariat. (2023). ASEAN Investment Report 2023 .
Aslam, F. N., & Rudatin , A. (2023). Analysis determinant Foreign Direct Investment (FDI) flows in the ASEAN region. Journal Policy Economics and Finance, 1(2), 205–211. https://doi.org/10.20885/jkek.vol1.iss2.art7
Berliyani , D., Yuliawan , D., & Gunarto, T. (2024). The Influence of Digital Technology on Economic Growth in 8 Countries in ASEAN. Revenue Journal: Management and Entrepreneurship, 2(2), 29–35. https://doi.org/10.61650/rjme.v2i2.564
Dua, P., & Verma, N. (2023). Drivers of Foreign Direct Investment Inflows to Emerging Asian Economies. Journal of Emerging Market Finance, 23(1), https://doi.org/10.1177/09726527231196722.
Dunning, J. (1980). Toward an Eclectic Theory of International Production: Some Empirical Tests. Journal of International Business Studies, 11(1), 9–31. https://doi.org/10.1057/palgrave.jibs.8490593
Edeh, J., Chowdhury, P. R., & Edeh, C. (2024). Foreign direct investment and energy demands: What drives economic growth in emerging economies? Foreign Trade Review. https://doi.org/10.1177/00157325241268967
Fang, X., Yang, Z., Zhang, Y., & Miao, X. (2024). Foreign direct investment and the structural transition of energy consumption: Impact and mechanisms. Humanities and Social Sciences Communications, 11, 1759. https://doi.org/10.1057/s41599-024-04280-y
Febriyanto, A., Azzam, A., Kutia, H. R., Rizal, A., & Yusfiarto, R. (2024). The impact of foreign direct investment on carbon emissions: A comparative study in the ASEAN countries with the highest foreign direct investment. Innovation and Green Development, 3(4), 100181. https://doi.org/10.1016/j.igd.2024.100181
Ghazalian , P.L. (2024). Does Economic Growth Attract FDI Inflows? A Dynamic Panel Analysis. Economies , 12(1), 1–19. https://doi.org/10.3390/economies12010001
Gök , A., Ashraf, A., & Jasinska , E. (2024). The Role of Carbon Emissions on Inward Foreign Direct Investment: A Nonlinear Dynamic Panel Data Analysis. Sustainability, 16(13), 1–16. https://doi.org/10.3390/su16135550
Hema, I., & Osathanunkul , R. (2021). No TitleThe US Contagion Effects on Foreign Direct Investment Flows in Developing Countries. The Journal of Asian Finance, Economics and Business, 8(4), 55–67. https://doi.org/10.13106/jafeb.2021.vol8.no4.0055
Jinapor, J. A., Abor, J. Y., & Graham, M. (2025). Energy consumption and inclusive growth in Sub-Saharan Africa: Does foreign direct investment make a difference? Energy Policy, 198, 114500. https://doi.org/10.1016/j.enpol.2025.114500
Kurniawan, M. L. A., & A'yun, I. Q. (2022). Dynamic analysis on export, FDI and growth in Indonesia: An autoregressive distributed lag (ARDL) model. Journal of Economics, Business, & Accountancy Ventura, 24(3), 350–362. https://doi.org/10.14414/jebav.v24i3.2717
Maibetly, F., & Idris, I. (2022). Analysis of factors affecting foreign direct investment (FDI) in ASEAN (lower middle income) plus three: Market seeking, resource seeking or efficiency seeking? Proceedings of the Eighth Padang International Conference on Economics Education, Economics, Business and Management, Accounting and Entrepreneurship, 8, 441–450.
https://doi.org/10.2991/aebmr.k.220702.067
Narula, R., & Dunning, J. H. (2010). Multinational enterprises, development and globalization: Some clarifications and a research agenda. Multinational Business Review, 18(1), 1–12. https://doi.org/10.1080/13600818.2010.505684
Narula, R., & Dunning, J. H. (2000). Industrial development, globalization and multinational enterprises: New realities for developing countries. Oxford Development Studies, 28(2), 141–167. https://doi.org/10.1080/713688313
Nabila, A., Sodik, J., & Nuryadin, D. (2026). Macroeconomic and institutional determinants of ASEAN middle income trap: Evidence from 2014–2023. Journal of Asset Management and Public Economy, 5(1), 29–39. https://doi.org/10.12928/jampe.v5i1.13910
Noviyanti , F., Sugema , I., & Irawan , T. (2023). Analysis of the Effect of Global Uncertainty and Financial Development on Foreign Direct Investment in Indonesia. Jurnal Economics and Development Policy, 12(2), 122–145. https://doi.org/10.29244/jekp.12.2.2023.122-145
Osei, M. J., & Kim, J. (2023). Financial development and the growth effect of foreign direct investment: Does one size fit all? International Economics, 173, 276–283. https://doi.org/10.1016/j.inteco.2023.01.001
Phommouny, P., He, S., Xayphachanh, N., & Rakotondrazaka, T. H. (2024). Determinants of foreign direct investment in ASEAN: Evidence from ASEAN 4 countries (Cambodia, Laos, Myanmar, and Vietnam). Saudi Journal of Economics and Finance, 8(7). https://doi.org/10.36348/sjef.2024.v08i07.002
Sahu, J. P., & Dash, S. K. (2021). What Explains FDI Inflows to ASEAN Countries? Evidence from Quantile Regressions. Journal of Asian Economic Integration, 3(1), 25-37. https://doi.org/10.1177/2631684620982775
Sapuan, N. M. , & Roly , M. R. (2021). The Impact of ICT and FDI as Drivers to Economic Growth in ASEAN-8 Countries: A Panel Regression Analysis. International Journal of Industrial Management, 9(1), 91–98. https://doi.org/10.15282/ijim.9.0.2021.5958
Tran-Nam, Q., & Tran, N. (2026). Foreign direct investment and manufacturing CO₂ emissions in ASEAN. Environmental Economics, 17(2), 1–14. https://doi.org/10.21511/ee.17(2).2026.01
Tsoy, L., & Heshmati, A. (2024). Is FDI inflow bad for environmental sustainability? Evidence from countries with different income levels. Environment, Development and Sustainability, 26, 28843–28858. https://doi.org/10.1007/s10668-023-03844-3
Wang, G., Lamadrid, R. L., & Huang, Y. (2024). Digital transformation and enterprise outward foreign direct investment. Finance Research Letters, 65, 105593. https://doi.org/10.1016/j.frl.2024.105593
Wen, J., Chima, H. M. F., & Salim, A. (2025). Revisiting the finance-innovation nexus: Evidence from Asia. Journal of Asset Management and Public Economy, 4(2), 174–192. https://doi.org/10.12928/jampe.v4i2.12984
World Bank. (2023). World Development Indicators.
Zhu, H., Duan, L., Guo, Y., & Yu, K. (2021). The effects of environmental regulation on FDI inflows: Evidence from a panel of developing countries.Energy Economics, 104, https://doi.org/10.1016/j.enpol.2019.111192
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Muhammad Fathur Reza, Silvia Maura Madrim, Indanazulfa Qurrota A’yun
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
