Triatmanto, Boge, Bawono, Suryaning and Wahyuni, Nanik (2023) The Contribution and Influence of Total External Debt, FDI, and HCI on Economic Growth in Indonesia, Thailand, Vietnam, and Philippines. Research in Globalization. ISSN 2590-051X

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Abstract

The goal of this research is to ascertain how much foreign debt, foreign investment, and HCI have contributed to the growth of the economies of the four ASEAN nations. This research uses the Panel Vector AutoRegression Model (PVAR). The PVAR method is a method used to analyze the relationship between several variables that change over time. This method combines two approaches, namely Vector Autoregression (VAR) and panel data. The type of data used in this research is secondary data, an annual time series with a time range from 2000 to 2020 for all cross-section variables taken from four countries in ASEAN, namely Indonesia, Thailand, Vietnam and the Philippines. The World Bank provided the data for this study. The variables examined in this study are GDP, total foreign debt, foreign debt, FDI, and HCI which are represented by education and health variables. From this study, we find that the relationship between variables varies, such as gross domestic product which has a significant negative relationship with FDI but has a significant positive relationship with debt service. In addition, there is a significant and negative relationship between GDP and total foreign debt, GDP is also negatively and significantly related to education and health variables, which means that GDP is also negatively and significantly related to HCI. It can be concluded that in the four countries we studied, an increase in debt service will increase people's consumption capacity which will lead to an increase in economic growth, but in this study total foreign
debt and debt service have a negative relationship with gross domestic product. This research shows that foreign direct investment (FDI) has a significant positive relationship with the gross domestic product (GDP) of ASEAN member countries, especially Indonesia, Thailand, Vietnam and the Philippines. Therefore, it is recommended that the governments of ASEAN member countries jointly determine foreign investment policies and manage their foreign debt to increase economic growth in
the Southeast Asia region. In addition, it is recommended that the governments of ASEAN member countries pay more attention to their fiscal policies, because increasing debt service costs can reduce economic growth. This can be seen when there is a surge in foreign debt which is disproportionate to
the ability to pay ASEAN member countries.

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