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Annals of Medicine and Medical Sciences
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  3. Impact of Foreign Direct Investment (FDI) and Idiosyncratic Risk on Ec…
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Impact of Foreign Direct Investment (FDI) and Idiosyncratic Risk on Economic Growth and Clean Energy Development in ASEAN Countries: An Empirical Analysis

Annals of Medicine and Medical SciencesVol. 9, No. 01, (2025) January 4, 2025pp. 6427-6439DOI: 10.18535/sshj.v9i01.1466 2 citations
526 84
Abstract

This study aims to review The relationship between foreign direct investment (FDI), idiosyncratic risks, and economic growth in ASEAN Countries. It seeks to provide insight into how FDI and associated risks affect economic development and the achievement of the Sustainable Development Goals (SDGs). The theoretical framework is based on endogenous growth theory, which posits that FDI contributes to economic growth through technology transfer, capital accumulation, and skill enhancement. Idiosyncratic risks, characterized by country-specific economic uncertainties, are believed to have a complex impact on growth. Although FDI is often considered a catalyst for economic growth, unique risks pose challenges that can hinder or moderate its impact.

Understanding these dynamics is critical for policymakers wishing to attract FDI and promote sustainable growth—research using quantitative methods, and analyzing secondary data from ASEAN countries. The data set includes 80 observations on GDP growth, specific risks, and SDG indicators. Descriptive statistics and regression analysis were used to explore relationships between variables. Regression analysis indicates that SDG 7 (Affordable and Clean Energy) negatively and significantly impacts GDP growth, suggesting a short-term trade-off between investing in clean and open energy economic expansion. Idiosyncratic risks also have a significant impact on GDP growth, highlighting the need for appropriate risk management strategies. Specific risks play an important role in the process of developing FDI economic growth in ASEAN countries. Policymakers must consider these risks and their interactions with the SDGs to create effective sustainable development strategies. The results highlight the importance of integrating sustainable development and risk management goals into FDI policy. By addressing unique risks, ASEAN countries can better leverage FDI for long-term economic growth.

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