Proceedings of the 9th International Conference on Accounting, Management, and Economics 2024 (ICAME 2024)

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The Mediating Role of Investment on Economic Growth Determinants in Indonesia: An Empirical Analysis

Authors
Abdul Hamid Paddu1, *, Indraswati Tri Abdi Reviane1, Nur Dwiana Sari Saudi1, Fitriwati Djam’an1, Mirzalina Zaenal1, Muhammad Jibril Tajibu1
1Hasanuddin University, Makassar, Indonesia
*Corresponding author. Email: hamidpaddu@fe.unhas.ac.id
Corresponding Author
Abdul Hamid Paddu
Available Online 30 July 2025.
DOI
10.2991/978-94-6463-758-8_219How to use a DOI?
Keywords
Economic Growth; Investment; Exchange Rate; Inflation; Interest Rate Gap
Abstract

Indonesia’s economic growth has been inconsistent, with various macroeconomic factors influencing its trajectory. The role of investment as a mediator in this process remains unclear. This study aims to examine the mediating effect of investment on the relationship between key macroeconomic variables (exchange rate, inflation, and interest rate gap) and economic growth in Indonesia. Using time series data from 2002 to 2021, this study employs multiple linear regression analysis with the Least Squares (LS) model. The mediating role of investment is tested using Baron and Kenny’s (1986) approach. The findings reveal that (1) exchange rate has a significant positive effect on investment; (2) inflation negatively impacts investment; (3) the interest rate gap positively influences investment. However, investment does not significantly mediate the relationship between these variables and economic growth. While macroeconomic factors significantly influence investment in Indonesia, the mediating role of investment in driving economic growth is not substantiated. This suggests the need for a more nuanced understanding of growth determinants in the Indonesian context.

Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 9th International Conference on Accounting, Management, and Economics 2024 (ICAME 2024)
Series
Advances in Economics, Business and Management Research
Publication Date
30 July 2025
ISBN
978-94-6463-758-8
ISSN
2352-5428
DOI
10.2991/978-94-6463-758-8_219How to use a DOI?
Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Abdul Hamid Paddu
AU  - Indraswati Tri Abdi Reviane
AU  - Nur Dwiana Sari Saudi
AU  - Fitriwati Djam’an
AU  - Mirzalina Zaenal
AU  - Muhammad Jibril Tajibu
PY  - 2025
DA  - 2025/07/30
TI  - The Mediating Role of Investment on Economic Growth Determinants in Indonesia: An Empirical Analysis
BT  - Proceedings of the 9th International Conference on Accounting, Management, and Economics 2024 (ICAME 2024)
PB  - Atlantis Press
SP  - 2707
EP  - 2715
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-758-8_219
DO  - 10.2991/978-94-6463-758-8_219
ID  - Paddu2025
ER  -