Li Falah: Jurnal Studi Ekonomi dan Bisnis Islam
Vol. 10 No. 1 (2025): June 2025

Economic Instability and Growth: Analyzing the Role Of EPU, Inflation, FDI and Trade on GDP In Eight Asian Countries

Nursam, Nurul Fatmah (Unknown)
Nur Fatiha (Unknown)
Ismail Pulungan (Unknown)
Taosige Wau (Unknown)
Shabur, Usman (Unknown)



Article Info

Publish Date
30 Jun 2025

Abstract

This study investigates the impact of inflation, foreign direct investment (FDI), trade openness, and economic policy uncertainty (EPU) on gross domestic product (GDP) in eight Asian countries Indonesia, China, Japan, South Korea, India, Pakistan, Thailand, and the Philippines over the period 2014–2023. Utilizing the Generalized Method of Moments (GMM) estimation for dynamic panel data, the results reveal that trade openness has a consistently positive and statistically significant effect on GDP, emphasizing its critical role in sustaining economic growth. FDI also exerts a positive influence, but its statistical significance varies across models, suggesting that differences in institutional capacity may affect its effectiveness. In contrast, inflation shows a negative and significant effect on GDP, indicating that price instability directly hampers growth. Moreover, EPU not only negatively impacts GDP but also significantly moderates the relationship between GDP and both FDI and trade openness, weakening their growth-enhancing effects. These findings highlight the necessity for Asian economies to maintain stable inflation, foster investment-friendly environments, and reduce policy uncertainty to fully harness the benefits of trade and foreign capital inflows.

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Journal Info

Abbrev

lifalah

Publisher

Subject

Humanities Decision Sciences, Operations Research & Management Social Sciences

Description

Li Falah, Journal of Islamic Economics and Business Studies is a scientific journal concerning on the latest research results and becomes a scientific communication media for lecturers, researchers, and or observers in the Islamic economics and business ...