Impact of Foreign Direct Investment, Productivity, and Growth on Indonesian Youth Unemployment

Authors

  • Annisa Rahma Febriyanti Department of Islamic Economics, Faculty of Economics and Business, Universitas Airlangga
  • Sulistya Rusgianto Department of Islamic Economics, Faculty of Economics and Business, Airlangga University
  • Sri Herianingrum Department of Islamic Economics, Faculty of Economics and Business, Airlangga University
  • Dian Ghani Reza Dasangga Universitas Airlangga

DOI:

https://doi.org/10.22219/jep.v22i01.33037

Keywords:

Youth Unemployment, Foreign Direct Investment, Labor Productivity, Economic Growth

Abstract

Unemployment is a consistent economic challenge faced by all countries. Indonesia, as a developing country, grapples with unemployment issues predominantly affecting young individuals. This research aims to examine the impact of Foreign Direct Investment (FDI), economic growth, and labor productivity on youth unemployment in Indonesia. Annual time series data from 1991 to 2022 were analyzed using Autoregressive Distributed Lag (ARDL) technique. The study reveals a significant negative relationship between economic growth and labor productivity with youth unemployment in the long term. Meanwhile, in the short term, FDI and labor productivity have a significant positive impact on youth unemployment. It is hoped that the Indonesia government will prioritize the creation of job opportunities for young domestic workers and provide training to enhance the quality of youth workforce in Indonesia

Downloads

Download data is not yet available.

References

Abduh, R. (2020). Dampak Sosial Tenaga Kerja Asing (TKA) di Indonesia. Sosek: Jurnal Sosial Dan Ekonom, 1(1), 26–27.

Alalawneh, M., & Nessa, A. (2020). The impact of foreign direct investment on unemployment: Panel data approach. Emerging Science Journal, 4(4), 228–242. https://doi.org/10.28991/esj-2020-01226

Alharbi, F. R., & Csala, D. (2022). A Seasonal Autoregressive Integrated Moving Average with Exogenous Factors (SARIMAX) Forecasting Model-Based Time Series Approach. Inventions, 7(4). https://doi.org/10.3390/inventions7040094

Alshyab, N., Sandri, S., & Daradkah, D. (2021). The effect of financial inclusion on unemployment reduction - Evidence from non-oil producing Arab countries. International Journal of Business Performance Management, 22(2–3), 100–116. https://doi.org/10.1504/IJBPM.2021.116409

Ardin, G. (2023). Okun’s law, Phillips curve and its effect on the growth of Income Tax Article 21 payments during the COVID-19 pandemic. Scientax, 4(2), 261–273. https://doi.org/10.52869/st.v4i2.426

Arisusanti, L. M., & Bendesa, I. K. G. (2021). ANALISIS PENGARUH INVESTASI, UPAH, DAN PERTUMBUHAN EKONOMI TERHADAP PENGANGGURAN TERDIDIK LULUSAN PERGURUAN TINGGI DI INDONESIA. E-Jurnal EP U, 1(1), 387–397.

Astari, M., Hamzah, L. M., & Ratih, A. (2019). Hukum OKUN: Pertumbuhan Ekonomi dan Tingkat Pengangguran di Indonesia. Jurnal Ekonomi Pembangunan, 8(1), 37–44. https://doi.org/10.23960/jep.v8i1.32

Bayrak, R., & Tatli, H. (2018). The determinants of youth unemployment: A panel data analysis of OECD countries. European Journal of Comparative Economics, 15(2), 231–248. https://doi.org/10.25428/1824-2979/201802-231-248

Bungin, B. (2005). Metode Penelitian Kuantitatif. Prenadamedia.

Büyüksarıkulak, A. M., & Kahramanoğlu, A. (2019). The prosperity index and its relationship with economic growth: Case of Turkey. Journal of Entrepreneurship …, December. http://scientificia.com/index.php/JEBE/article/view/112

Choudhry, M. T., Marelli, E., & Signorelli, M. (2012). Youth unemployment rate and impact of financial crises. International Journal of Manpower, 33(1), 76–95. https://doi.org/10.1108/01437721211212538

Chowdhury, M. S. R., & Hossain, M. T. (2014). Determinants of Unemployment in Bangladesh: A Case Study. SSRN Electronic Journal, October. https://doi.org/10.2139/ssrn.2402908

Darman, D. (2013). Pengaruh Pertumbuhan Ekonomi terhadap Tingkat Pengangguran: Analisis Hukum Okun. The Winners, 14(1), 1. https://doi.org/10.21512/tw.v14i1.639

Ebaidalla, E. M. (2016). Determinants of youth unemployment in OIC member states: A dynamic panel data analysis. Journal of Economic Cooperation and Development, 37(2), 81–102.

Egessa, A., Nnyanzi, J. B., & Muwanga, J. (2021). Determinants of youth unemployment in Uganda: The role of gender, education, residence, and age. IZA Journal of Labor Policy, 11(1), 1–29. https://doi.org/10.2478/izajolp-2021-0008

Ekananda, M. (2018). Analisis Ekonometrika untuk Keuangan. Salemba Empat.

Folawewo, A. O., & Adeboje, O. M. (2017). Macroeconomic Determinants of Unemployment: Empirical Evidence from Economic Community of West African States. African Development Review, 29(2), 197–210. https://doi.org/10.1111/1467-8268.12250

Ghozali, I. (2018). Aplikasi Analisis Multivariate dengan Program IBM SPSS 25. Badan Penerbit Universitas Diponegoro.

Grahovac, D., & Softić, S. (2017). Impact of the FDI on Unemployment Rate in Countries of West Balkan. Review of Innovation and Competitiveness, 3(2), 65–82. https://doi.org/10.32728/ric.2017.32/4

Greene, W. H. (2012). Econometric Analysis. In Journal of Geoscience and Environment Protection (Vol. 03, Issue 10). Pearson. https://doi.org/10.4236/gep.2015.310006

Gujarati, D. N., & Porter, D. C. (2015). Dasar-Dasar Ekonometrika. Salemba Empat.

Hasan, Z., & Sasana, H. (2020). Determinants of youth unemployment rate in Asean. International Journal of Scientific and Technology Research, 9(3), 6687–6691.

ILO. (2008). Unemployment Rate. In Encyclopedia of Finance (Issue October, pp. 280–280). https://doi.org/10.1007/0-387-26336-5_2119

ILO. (2011). Global Employment Trends 2011.

Iyoboyi, M., Sabitu, A., & Okereke, S. F. (2024). Modeling the Okun’s Law amid Structural Breaks: Evidence from Nigeria. Journal of Indonesian Applied Economics, 12(1).

Jude, C., & Silaghi, M. I. P. (2016). Employment effects of foreign direct investment: New evidence from Central and Eastern European countries. International Economics, 145, 32–49. https://doi.org/10.1016/j.inteco.2015.02.003

Kamga, F., Fokam, D. N. D. T., & Ningaye, P. (2022). Political instability and youth unemployment in sub-Saharan Africa. Review of Development Economics, 26(5). https://doi.org/10.1111/rode.12870

Kurnia, R. E., & Septiani, Y. (2021). Social and Economic Factors Determining the Unemployment Rate in the Bregasmalang Region 2010-2020. Eko-Regional: Jurnal Pengembangan Ekonomi Wilayah, 16(1), 63–73. https://doi.org/10.20884/1.erjpe.2021.16.1.1800

Mamuti, A., & Ganic, M. (2019). Impact of FDI on GDP and Unemployment in Macedonia Compared to Albania, Bosnia and Herzegovina. Advances in Science, Technology & Innovation, 167–173. https://doi.org/10.4337/9781782549567.00039

Menegaki, A. N. (2019). The ARDL method in the energy-growth nexus field; best implementation strategies. Economies, 7(4), 1–16. https://doi.org/10.3390/economies7040105

Msigwa, R., & Kipesha, E. F. (2013). Determinants of Youth Unemployment in Developing Countries : Evidences from Tanzania. Journal of Economics and Sustainable Development Vol.4, No.14, 2013, 4(14), 67–77.

Paramita, R., & Christianingrum, R. (2022). Pengaruh Investasi Terhadap Penyerapan Tenaga Kerja. Jurnal Budget : Isu Dan Masalah Keuangan Negara, 2(1), 32–50. https://doi.org/10.22212/jbudget.v2i1.36

Parisi, M. L. (2017). Labor productivity, temporary work, and youth unemployment: The experience of Southern Europe. European Youth Labour Markets: Problems and Policies, 175–187. https://doi.org/10.1007/978-3-319-68222-8_12

Parisi, M. L., Marelli, E., & Demidova, O. (2014). Labour Productivity of Young and Adult Temporary Workers and Youth Unemployment: A Cross-country Analysis (May).

Prasaja, M. H. (2013). Pengaruh Investasi Asing, Jumlah Penduduk Dan Inflasi Terhadap Pengangguran Terdidik Di Jawa Tengah Periode Tahun 1980-2011. Economics Development Analysis Journal, 2(3), 72–84. https://doi.org/10.15294/edaj.v2i3.1983

Pratama, R. A., & Purmiyati, A. (2020). An increasing number of young people are unemployed due to inflation, education, and economic growth. Opcion, 36(91), 296–308.

Ramadhan, M. R. (2018). Foreign Direct Investment, Tingkat Pegagguran dan Kesenjangan Pendapatan. Ekonomi Manajemen Dan Bisnis, 19(1), 49–55. https://journal.unimal.ac.id/emabis/article/view/277/192

Shrestha, M. B., & Bhatta, G. R. (2018). Selecting appropriate methodological framework for time series data analysis. Journal of Finance and Data Science, 4(2), 71–89. https://doi.org/10.1016/j.jfds.2017.11.001

Suryadi. (2019). Kewirausahaan dan Pemberdayaan Pemuda Dalam Mengurangi Pengangguran. Jurnal Ketenagakerjaan, 14(1), 54–67. http://journals.kemnaker.go.id/index.php/naker/article/view/55

Syamsudin, S., & Setyawan, A. A. (2008). Foreign Direct Investment (Fdi), Kebijakan Industri, Dan Masalah Pengangguran: Studi Empirik Di Indonesia. Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi Dan Pembangunan, 9(1), 107. https://doi.org/10.23917/jep.v9i1.1035

Tello, Z. L. Z. (2015). DETERMINANTS OF UNEMPLOYMENT RATE IN SELECTED ASEAN (ASSOCIATION OF SOUTHEAST ASIAN NATIONS) MEMBER STATES: A PANEL DATA ANALYSIS: Vol. II (Issue April).

Ventura, M. E. (2023). Chapter 3: Vector Autoregressive Methods. In Time Series Analysis Handbook.

Wijayanto, H., & Ode, S. (2019). Dinamika Permasalahan Ketenagakerjaan Dan Pengangguran Di Indonesia. Jurnal Ilmiah Administrasi Publik Dan Pembangunan, 10(1), 1–8.

Yaumidin, U. K. (2015). Output and Unemployment: Testing Okun’s Law in Indonesia. Review of Indonesian Economic and Business Studies, 6(1), 43–74.

Zulhanafi, Aimon, H., & Syofyan, E. (2013). Analisis Faktor-Faktor Yang Mempengaruhi Produktivitas Dan Tingkat Pengangguran Di Indonesia. Jurnal Kajian Ekonomi, 2(03), 7087.

Downloads

Published

2024-06-21

Issue

Vol. 22 No. 01 (2024): Jurnal Ekonomi Pembangunan

Section

Journal

License

Copyright (c) 2024 Annisa Rahma Febriyanti, Sulistya Rusgianto, Sri Herianingrum, Dian Ghani Reza Dasangga

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Authors who publish with Jurnal Ekonomi Pembangunan (JEP) agree to the following terms:

  1. For all articles published in Jurnal Ekonomi Pembangunan (JEP), copyright is retained by the authors. Authors permit the publisher to announce the work with conditions. When the manuscript is accepted for publication, the authors agree to the publishing right's automatic transfer to the publisher.
  2. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a  Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
  3. Authors can enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
  4. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) before and during the submission process, as it can lead to productive exchanges and earlier and greater citation of published work (See The Effect of Open Access).

 

Creative Commons License
This work is licensed under a  Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.