IMPACT OF RENEWABLE ENERGY, FDI, AND INFLATION ON INDONESIA’S ECONOMIC GROWTH

Abstract

The study aims to analyze the impact of renewable energy consumption, foreign direct investment (FDI), and inflation on economic growth in Indonesia. The data in this study is a time series on the World Bank from 1990-2022. The analysis technique used is the Autoregressive Distributed Lag Model (ARDL). According to the ARDL test, renewable energy consumption has no impact on economic growth, FDI has a significant positive effect on economic growth, and inflation has a negative impact on economic growth. In the short term, only renewable energy consumption does not affect economic growth. In the long term, all independent variables significantly impact economic growth. The implications are that the high potential of renewable energy in Indonesia must be optimally exploited to enhance economic growth and minimize the use of non-renewable energies. The government's active role in organizing the FDI that enters Indonesia is also essential. As a potential country for investment, the Indonesian FDI should be labor-intensive to drive economic activity and create inclusive economic growth. Furthermore, the government's inflation controls must be continuously monitored to ensure stable prices.