Dharmawangsa: International Journal of the Social Sciences, Education and Humanitis
Vol 7, No 2 (2026): Social Sciences, Education and Humanities

THE EFFECT OF FOREIGN DIRECT INVESTMENT (FDI) AND EXPORTS ON ECONOMIC GROWTH IN EAST NUSA TENGGARA (NTT) PROVINCE DURING THE PERIOD 2010–2024: A VECM APPROACH

Fransisco X Lay (Universitas Nusa Cendana)
Maria Indriyani H. Tiwu (Universitas Nusa Cendana)
Rikhard T. C. Bolang (Universitas Nusa Cendana)
Fransina W. Ballo (Universitas Nusa Cendana)



Article Info

Publish Date
08 Jul 2026

Abstract

This study aims to analyze the long-run relationship, effects, and dynamic interactions between Foreign Direct Investment (FDI), exports, and economic growth in East Nusa Tenggara (NTT) Province during the period 2010–2024. The research employs a quantitative approach using the Vector Error Correction Model (VECM) based on quarterly secondary data obtained from the Central Bureau of Statistics (BPS) and the Ministry of Investment/BKPM. The results indicate the existence of a long-run relationship among FDI, exports, and economic growth. Partially, FDI has a significant negative effect on economic growth with a coefficient of -0.057630, while exports have no significant effect. The findings also reveal that there is no strong causal relationship among the variables, and the adjustment process toward long-run equilibrium tends to occur slowly, as indicated by the Error Correction Term (ECT) value of -0.130392. In addition, the contribution of FDI and exports to economic growth remains relatively low compared to domestic factors. These findings suggest that the role of FDI and exports in promoting economic growth in NTT has not been optimal due to structural constraints such as low value-added production, weak sectoral linkages, and limited infrastructure.

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Journal Info

Abbrev

dharmawangsa

Publisher

Subject

Humanities Education Social Sciences Other

Description

Dharmawangsa International Journal of The Social Sciences, Education and Humanities is a journal published by the Research Institute of Dharawangsa University, Medan. This journal is published periodically three times a year, namely in March, August and November. Articles published in this journal ...