LEVERAGING MACRO ACCOUNTING FOR ECONOMIC GROWTH: INSIGHTS FROM ASEAN DATA
Research Objective: This research aims to understand the impact of foreign direct investment (FDI) and gross domestic product (GDP) on economic growth, with particular emphasis on the regulatory impact of idiosyncratic risk. By analyzing how these variables interact, we seek to provide insight into the nuanced relationships that determine economic development. Model: The study uses a regression model in which economic growth, measured by GDP growth rate, is the dependent variable. The main independent variables include constant FDI inflows and GDP and their interactions with idiosyncratic risk. The model estimates both the direct and moderate effects of these variables on economic growth. Results: The regression results show that although inward FDI alone has an insignificant negative impact on economic growth (p = 0.068), its interaction with idiosyncratic risk response had a significant positive effect (p = 0.020). Similarly, constant GDP has a significant negative direct effect (p = 0.026), but its interaction with idiosyncratic risk also has a significant positive effect (p = 0.043). These results show that idiosyncratic risks play an important role in changing the impact of FDI and GDP on economic growth, emphasizing the importance of considering risk factors in policy analysis. Economy. Policy Implications: Policymakers should recognize the dual role of idiosyncratic risk in moderating the impact of FDI and GDP on economic growth. Policies aimed at minimizing idiosyncratic risks can enhance the positive impact of FDI and GDP, thereby promoting a more favorable environment for economic development. Therefore, targeted risk management strategies need to be integrated into economic planning and investment policies to optimize growth outcomes.
Economic Growth, Foreign Direct Investment, GDP, Idiosyncratic Risk.