Open-ended impact of afta on fdi inflows: Evidence from macro-level data of indonesia,malaysia,thailand and firm-level data of indonesia

This study attempts to observe the asean economic integration progressbased on the impact of asean free trade area (afta) on fdi inflows ofboth multi-country (indonesia,malaysia and thailand) with macroeconomyleveldata and single country (indonesia) with micro firm-level data.macroeconomy level data uses macroeconomy data set with time-dummyvariable of ‘before and after’ the comprehensive implementation of afta asthe representation of afta. micro firm-level data utilizes indonesia’smanufacturing survey of 25,696 firms under the international standard of industrial classification digit 5 (isic-5) with the asean’s common effectivepreferential tariff (cept) of 19,425 tariff rates data as the representation of afta. the form of the macro-level data is longitudinal and the form of the micro-level data is cross-sectional. from the multi-country analysis this study finds that afta is not effective in attracting fdi inflows while from the single-country analysis it finds the opposite. these findings prove that the impact of afta on fdi inflows in asean is open-ended and varies within member states. © 2015,statistical economic and social research. all rights reserved.