example of South Korean and North Korea. These two countries are having many

similarities from culture, language, and race, yet they are distinct in the way they govern

the countries. North Korea, although its name is Democratic People of Republic Korea,

yet its government is dictatorial. The country rolled by Kim‟s family, from Kim Il Sung,

Kim Jong Il, to Kim Jong Un. As dictatorial government as usual, the country is strict

both economically and politically, so that difficult for foreign investor to penetrate into

prosperity. On the other hand, South Korea is vice versa. Its government is much more

democratic and its market is much more opened. In South Korea, foreign investors could

The openness of institution is the lesson that we learn from two countries above.

The more opened a country, the easier the capital follows into the country. Moreover,

(Robinson & Acemoglu, 2012) add that exclusive economic institution and extractive and

inclusive political institution is cardinal to make the market be penetrable. This argument

is reasonable since inclusive economic institution gives the opportunity for everyone exist

on the market. And, the market itself is tend to be inclusive, if the economic institution is

inclusive too. (Robinson & Acemoglu, 2012) explain that inclusive economic institution

gives people freedom to pursue the vocation in life that the best suit their talents and

democratic country like the United States (U.S) and South Korea tend to be more liberal

in economic institution. (Comaroff & Comaroff, 2012) on Max Weber‟s argument on his

institution is representative of the political system, and political system is representative

authority of Deng Xiaoping, its economy be more and more liberal (Fewsmith, 2018). So

yet its economic system is liberal.

Economic liberalism is much more attractive than either Socialism and Marxism.

life. Although Suharto himself was an authoritarian leader, yet he was preferring to

Liberal economic system than Socialism. Hence, since the first year of his authority, he

used liberal economists like Emil Salim, Widjiyo Nitisastro, and Ali Wardhana to assist

him to recover Indonesia‟s economy (Abdulgani-Knapp, 2007).

Since then, Indonesia – Soeharto‟s new order, was transformed its political

economy from socialist economy by Soekarno‟s version, into more liberal designed by

resources to liberalization of Indonesia market (Davidson, 2018). This transformation was

The graph above shows that since President Soekarno‟s abdication, and

inauguration of President Soeharto in 1967, Indonesia GDP significantly growth from

that time to 1970. On this time, as explained in the graph above, President Soeharto tried

to restructured the economy into be more liberal, so that foreign direct investment (FDI)

able to flow into the country.

Soeharto, although he was an authoritarian and militaristic, he successfully built

various infrastructures, implemented a few social programs, and liberalized the economy.

From the economic liberalization, Soeharto, unlike Soekarno, he was favorable of foreign

investors particularly in natural resources sectors. Moreover, in the era of Soeharto, the

manage the economy that they use liberal and capitalist system. The system, has

generally stable as the graph below.

Figure 2. Indonesia GDP 1967-1998 (Source: https://data.worldbank.org,

accessed: October 10, 2020

The graph above informs about the fluctuation of Indonesia‟s GDP throughout of

terribly suffer. For example, according to the World Bank‟s data since 1961 to 1966,

Indonesia economy on the great crisis. In 1963, the economic growth was - 222% and

inflation was about 650% (www.data.worldbank.org, 2020). This graph, however, shows

that President Soeharto able to boost Indonesia GDP relatively high throughout his

tenure. Although in 1981 to 1982 the GDP was down, yet on the years ahead, the GDP

use the foreign investment since booth demographically and economically, Indonesia was

quite attractive for those who aims to invest or open a business in Indonesia. However, in

1997 Indonesia was facing the monetary crisis, and Soeharto was abdicated in 1998. But

still, this Indonesia Stock Exchange still be the main facility for foreign investors to

invest. Hence, the government maintains its existence, and it exists until now in 2020.

Figure 3. Data FDI 1970-2019 (Source: https://data.worldbank.org, accessed:

October 2020)

As the graph above, it informs that from the reopening Jakarta Stock Exchange in

Asia Monetary Crisis.

Susilo Bambang Yudhoyono, he was an excellent president from economy

policies standpoint. I his era, although Indonesia was negatively suffering of Global

Financial Crisis in 2008, but under his leadership the economic able to recovery for a

more attractive. In addition, in the same year, the number of foreign direct investment in

Indonesia was rising up.

The increasing the number of foreign direct investment when the Global

Financial Crisis in 2008 was not the only one of president Yudhoyono‟s success

indicators, but those able to be seen from the others indicators. For example, in 2004,

when Yudhoyono started his presidency, Indonesia economic growth was -4.12%. In

2004 since Megawati unable to manage the condition. Nevertheless, by the time he begin

his presidency, Yudhoyono launched some policies like negotiation with the Independent

growth.

The next president is Joko Widodo, he was taking over the authority from

President Yudhoyono through 2014 general election. In 2015, the economic growth was

5.0%. On that year, the economy was stagnant, which means there was insignificant

improvement than previous year. Furthermore, in 2016, the economy was a little bit

growing, the number of economic growth was 5.03%. The growing of that year was only

0.03%, and in 2017, the growing was also a little bit increase, which was 0.04% that was

mean that the economic growth on that year was 5.07%. On the next couple years, in

2018 and 2019, 5.17% and 5.025%. Reflecting and comparing the economic growth

investment. He once said that investment is the key to accelerating economic growth

amid a slowing global economy (www.thejakartapost.com: 2020). Additionally, president

Widodo restructure the bureaucracy, particularly for investment permit. In addition, he

currently, along with People Legislative Council, arranged Omnibus Law to boost foreign

direct investment.

growth may according to the economic theory that investment is one of the economic

growth indicators. Because, for Widodo, the government already maximized the

government spending. Hence, he should maximize the investment to boost economic

growth.

in Indonesia those consequently able to create new jobs for Indonesian people since the

corporation needs employers to operate. Through their wages, the employers able to

and profit from their business since they may export the products in a larger number.

employers do. Through this way, the economic growth hopefully would rise from the

consumption, the investment, the government spending, and the net export minus import.

If economy always attractively growth from time to time, the condition is

interesting for the investor, then they invest in Indonesia through whether incorporating

Indonesia‟s Stock Market. Then, it triggers economic growth as explained above. This

concept called multiplier effects. This multiplier effect is the reason why the government

struggles for foreign direct investment. It is already clear that the investment able to boost

the economic growth since investment itself theoretically a part of economic growth

Foreign direct investment whether through incorporating corporations in Indonesia or

that such economic growth whether able to heighten the corporations‟ financial

performance or not. This is cardinal since if economic growth able to heighten the

investment in Indonesia. Hence, it will also stimulate the economic growth in Indonesia.

In another word, foreign direct investment able to create continuous economic growth.

performance and economic growth be more blatant, the researcher needs to explain this

increase too.

able to operate the data into Scatter Plot. According to the Scatter Plot above, there is

seems a positive correlation between corporations‟ financial performance and economic

growth since both of the data show the same pattern. Although on the left side there is a

negative due to Asia Financial Crisis. Therefore, the dot on the left side is an anomaly

since it was happened in an extraordinary condition.

Relay on the circumstance above, Scatter Plot able to show the correlation

This research is a study that uses regression analysis and uses economic growth

as an indicator. Because the researcher uses regression analysis to measure the correlation

among the variables, hence it is important to explain the regression model that used in

this research. The type of regression analysis, which the researcher would uses in this

research is simple linear regression analysis. The formulation of this kind of regression is:

Until this step, the researcher already explained the the type of regression analysis to

analysis the correlation between economic growth, as an independent variable, to