The Effect of Ease of Doing Business, Market Size and Political Stability on Foreign Direct Investment in Southeast Asia

Abstract

This study aims to determine the effect of ease of doing business, market size and political stability on foreign investment as a potential capital flow to achieve the success of economic development in Southeast Asia.. Research data were obtained from the World Bank and ASEAN Secretariat data. For the 2010-2019 data period with five Southeast Asia countries. Panel data multiple regression analysis technique is used to analyze the effect of ease of doing business, market size and political stability on foreign direct investment. By using the random effect model (REM) which is the best model, all the factors studied have a significant effect on FDI. These results imply that if the ease of doing business, market size and political stability are conducive, the flow of FDI will increase. Therefore, it is necessary to improve a conducive investment climate to encourage increased FDI inflows.