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The Effect of Inflation, Foreign Direct Investment and Economic Freedom on Indonesia Economic Growth

Authors
  • Amirullah Department of Development Economics, Faculty of Economics and Business, Universitas Sumatra Utara, Medan 20155, Indonesia
  • Arif Rahman Department of Development Economics, Faculty of Economics and Business, Universitas Sumatra Utara, Medan 20155, Indonesia
Issue       Vol 9 No 1 (2026): Talenta Conference Series: Local Wisdom, Social, and Arts (LWSA)
Section       Articles
Section      

Copyright (c) 2026 Talenta Conference Series: Local Wisdom, Social, and Arts (LWSA)

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Galley      
DOI: https://doi.org/10.32734/lwsa.v9i1.2709
Keywords: Inflation Foreign Direct Investment Economic Freedom Economic Growth Autoregressive Distributed Lag (ARDL)
Published 2026-03-09

Abstract

This study aims to determine the effect of inflation, foreign direct investment and economic freedom in the short and long term on Indonesia economic growth in 1994-2023. This type of research is quantitative using the Autoregressive Distributed Lag (ARDL) method in the form of time series data with a research time span from 1994 to 2023. The research data is obtained from the official website of the World Bank and Heritage Foundation. The results showed that in the short term, the inflation variable has a significant positive effect on Indonesia economic growth. While in the long run, the inflation variable has a significant negative effect on Indonesia economic growth. Foreign direct investment variable in the short term has a significant negative effect on Indonesia economic growth. Meanwhile, in the long run, foreign direct investment has a significant positive effect on Indonesia economic growth at the 10% significance level. Economic freedom variable in the short term has a significant positive effect on Indonesia economic growth. While in the long run, the economic freedom variable has a significant negative effect on Indonesia economic growth.