The Effects of Exports, Inflation, and the Labor Force Participation Rate (LFPR) on Economic Growth with Investment as a Moderating Variable in Indonesia

Abstract

Indonesia’s economic growth faces challenges in maintaining long-term stability amid global macroeconomic pressures. Export activity, inflation, and labor force participation are key variables that influence growth dynamics, although their effects are not always linear. On one hand, exports have strong potential to drive national output, while inflation and the labor force participation rate (LFPR) often exert distinct pressures on economic performance. Investment is believed to strengthen or alter the direction of these variables’ influence on economic growth. This study aims to analyze the influence of exports, inflation, and LFPR on Indonesia’s economic growth, with investment as a moderating variable, using time series data from 1993 to 2024. This research employs a descriptive quantitative approach. The data used are secondary data, and the methods applied include Multiple Linear Regression and Moderated Regression Analysis using the residual method, processed with SPSS version 27. The results of the study show that: (1) exports have a positive and significant effect on economic growth in Indonesia, (2) inflation has a negative and significant effect on economic growth, (3) LFPR has a negative and significant effect on economic growth, (4) exports, inflation, and LFPR simultaneously have a significant effect on economic growth, (5) investment moderates the relationship between exports and economic growth by strengthening the effect, (6) investment does not moderate the relationship between inflation and economic growth, and (7) investment does not moderate the relationship between LFPR and economic growth.