Indonesia’s Economic Diplomacy in Comparison with ASEAN Countries: Domestic Institutional Quality and International Factors
DOI:
https://doi.org/10.21512/jas.v13i2.12579Keywords:
Economic Diplomacy, Foreign Policy, FDI Inflows, Trade Balances, ASEANAbstract
This research examined Indonesia's economic diplomacy efforts and outcomes in comparison with those of ASEAN countries, specifically Singapore, Malaysia, Thailand, and Vietnam, focusing on international trade and foreign direct investment (FDI) inflows from 2004 to 2023. Using economic diplomacy as a strategic tool to achieve foreign policy objectives in trade and investment, the research applied a quantitative methodology to evaluate the relationship between economic diplomacy efforts and outcomes across the ASEAN-5 countries. The research hypothesized that increased economic diplomacy efforts lead to improved outcomes, as measured by FDI inflows and trade balance indicators. Economic diplomacy efforts were assessed through the interaction between domestic and international factors, including political stability, regulatory quality, government effectiveness, ease of doing business, participation in regional trade agreements, and bilateral investment treaties (BITs). The research provides statistical evidence to support the hypotheses, indicating that targeted policies aimed at improving regulatory quality, ease of doing business, maintaining political stability, and carefully managing international agreements can bolster economic diplomacy performance for both Indonesia and the ASEAN-4 countries. However, BITs do not significantly affect economic diplomacy outcomes across the model. While the initial model indicates that government effectiveness negatively affects economic diplomacy outcomes, the interaction term reveals that political stability can mitigate this adverse effect. This means that stable political conditions can strengthen the positive aspects of government effectiveness in economic diplomacy.
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