The need for investment as factors triggering the development of a country has a very important role. But with limited funds owned by a state, the role of foreign investment may be necessary to achieve the economic growth target that was set. Foreign Direct Investment is one form of foreign investments that are considered to have a more significant impact than foreign investments in portfolio. FDI (Foreign Direct Investment) is believed to be one important source of financing for developing countries including Indonesia. The presence of FDI is expected to provide a substantial contribution to development through the transfer of assets, science and technology, and managerial skills to improve an economic growth.
The main purpose of this study is to examine the relationship FDI on economic growth in Indonesia by using time series data from 1987 to 2014. This was quantitative study. The analysis of this study is using Ordinary Least Square (OLS) Regression.
The result of the study obtained show FDI inflow has positive and significant impact on economic growth in Indonesia, while total of employment and infrastructure have a negative effect and not significant to economic growth. In order to boost economic growth, Indonesia should attract more FDI inflow, improvement of infrastructure and enhance the quality of human resources.
