Open AccessDeterminants of Political Stability to Support Foreign Investment in Indonesia
Author(s) -
Benny Budiawan Tjandrasa
Publication year - 2021
Publication title -
petra international journal of business studies
Language(s) - English
Resource type - Journals
ISSN - 2621-6426
DOI - 10.9744/ijbs.4.2.97-108
Subject(s) - political stability , politics , multinational corporation , language change , political corruption , political instability , political risk , government (linguistics) , investment (military) , economics , foreign direct investment , state (computer science) , novelty , economic stability , terrorism , business , finance , political science , law , macroeconomics , art , linguistics , philosophy , literature , theology , algorithm , computer science
What investors often consider before deciding to invest in various countries is the political situation. The risks faced by investors in the event of political instability are regulatory changes, legal disputes, forced takeovers of companies, disruption to regional stability, policies against acts of terrorism, and changes in state ideology. The purpose of this study is to find a determinant of political stability in Indonesia that will be useful for investors and multinational companies, and the government in maintaining political stability. Systematic secondary data sampling from January 2015 to December 2019 was used for explanatory study purposes and to build a model. This study concludes that the rule of law, control of corruption, and oil prices have a significant effect on political stability in Indonesia, while the inflation rate does not have a significant effect on political stability in Indonesia. The novelty of this research is the formation of a political stability model for Indonesia and why an increase in control of corruption actually has a negative effect on political stability in Indonesia.