The influence of the human development index on domestic investment flows in Indonesia

  • Tulus Widjajanto 
    Indraprasta University PGRI
    Indonesia
  • Vinandri Hapsari
    Indraprasta University PGRI
    Indonesia

Abstract

This study examines the influence of the Human Development Index (HDI) on domestic investment flows in Indonesia using a qualitative research approach. By employing a literature review and library research method, this paper synthesizes existing studies to understand how human development indicators—such as education, health, and income—affect investment decisions within the country. The findings suggest that regions with a higher HDI tend to attract more domestic investment due to better infrastructure, a more skilled workforce, and improved economic stability. Conversely, areas with lower HDI scores often struggle to secure substantial investment due to inadequate human capital and limited access to resources. Furthermore, this study highlights the role of government policies in bridging the development gap, emphasizing the importance of targeted investments in education and healthcare to foster sustainable economic growth. The analysis also considers the potential challenges faced by investors in different regions of Indonesia, including regulatory constraints, market uncertainties, and socio-economic disparities. By drawing insights from various academic sources, this research contributes to the broader discourse on the relationship between human development and economic activity, particularly in emerging economies. The study concludes that a strong HDI serves as a crucial determinant for enhancing domestic investment flows, thereby reinforcing the need for continuous improvements in human capital development. Future research should explore empirical data to further validate these qualitative findings and provide more policy-oriented recommendations.

Lisensing Information
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

References
  1. Aditiya, H. B., & Aziz, M. (2021). Prospect of hydrogen energy in Asia-Pacific: A perspective review on techno-socio-economy nexus. International Journal of Hydrogen Energy, 46(71), 35027–35056.
  2. Ananda, C. F., & Prasetyia, F. (2024). Elementary School Dropout Rate: The Policy Application of “Program Indonesia Pintar”(PIP) as a Reduction in Elementary School Dropouts in Papua, Indonesia. Proceedings of Brawijaya Economics and Finance, 3, 229–252.
  3. Baharin, R., Syah Aji, R. H., Yussof, I., & Mohd Saukani, N. (2020). Impact of human resource investment on labor productivity in Indonesia. Interdisciplinary Journal of Management Studies (Formerly Known as Iranian Journal of Management Studies), 13(1), 139–164.
  4. Bock, M. J. (2021). Income Inequality in ASEAN: Perceptions on Regional Stability from Indonesia and the Philippines.
  5. Budiono, S., & Purba, J. T. (2023). Factors of foreign direct investment flows to Indonesia in the era of COVID-19 pandemic. Heliyon, 9(4).
  6. Djokoto, J. G., & Wongnaa, C. A. (2023). Does the level of development distinguish the impacts of foreign direct investment on the stages of human development? Sustainable Futures, 5, 100111.
  7. Febriansyah, M. R., Unde, A. A., & Farid, M. (2022). Community Satisfaction Of Employee Communication In Providing Services At The One Door Integrated Services And Investment Services (Dpm-Ptsp) City Of Makassar. Webology, 19(2).
  8. Githaiga, P. N., & Kilong’i, A. W. (2023). Foreign capital flow, institutional quality and human capital development in sub-Saharan Africa. Cogent Economics & Finance, 11(1), 2162689.
  9. Hasan, Z. (2021). The effect of economic growth and human development index on poverty in Indonesia. Journal of Economics and Sustainability, 3(1), 12.
  10. Haseeb, M., Suryanto, T., Hartani, N. H., & Jermsittiparsert, K. (2020). Nexus between globalization, income inequality and human development in Indonesian economy: Evidence from application of partial and multiple wavelet coherence. Social Indicators Research, 147(3), 723–745.
  11. Hidayat, M., Bachtiar, N., & Primayesa, E. (2023). The influence of investment, energy infrastructure, and human capital towards convergence of regional disparities in Sumatra Island, Indonesia: Using oil and gas data and without oil and gas. International Journal of Energy Economics and Policy, 13(4), 139–149.
  12. Kuncoro, M. (2013). Economic geography of Indonesia: can MP3EI reduce inter-regional inequality. South East Asian Journal of Contemporary Business, Economics, and Law, 2(2), 17–33.
  13. Margaretha, O., & Mahadewi, L. (2024). The Effect of Corporate Governance and Ownership Structure on Financial Performance with ESG Disclosure as a Moderating Variable in Companies Listed on the Indonesia Stock Exchange. Exchange (IDX), 13, 14.
  14. Munabari, F. (2024). The Reorientation of Indonesia’s Maritime Fulcrum in Addressing Shifting Priorities and Strategic Challenges. Jurnal Lemhannas RI, 12(4), 551–566.
  15. Nasir, A., Hassan, I. I., Ma’ruf, A., Suharno, N. E., Goenharto, S., Purwanto, C. R., & Tyas, A. P. M. (2024). Coping efforts made: Psychological burden of people living with tuberculosis due to social stigma in society. A qualitative phenomenology study. Plos One, 19(7), e0303331.
  16. Nimah, L., Tristiana, R. D., Nursalam, N., Hidayati, L., Sulistyono, R. E., & Kumpeera, K. (2023). Patients’ Perceptions of Multi Drug Resistant Tuberculosis Outpatient in Healthcare Services: A Qualitative Study.
  17. Onah, M. N. (2020). Approaches to understanding and measuring women’s empowerment and its relationship with women’s and children’s dietary diversity in sub-Saharan Africa.
  18. Owens, J., Rassool, G. H., Bernstein, J., Latif, S., & Aboul-Enein, B. H. (2023). Interventions using the Qur’an to promote mental health: a systematic scoping review. Journal of Mental Health, 32(4), 842–862.
  19. Pangestika, M. (2020). Developing English Writing Materials for Accounting Program (A Research and Developmental Study at SMKN 7 Kabupaten Tangerang). Jakarta: FITK UIN Syarif Hidayatullah Jakarta.
  20. Rahmawati, F., & Intan, M. N. (2020). Government Spending, Gross Domestic Product, Human Development Index (Evidence from East Java Province). KnE Social Sciences, 774–786.
  21. Rolando, B., & Mulyono, H. (2025). Digital Marketing Strategies for Sales Growth in Indonesian Home Industries. Journal of Trends Economics and Accounting Research, 5(3), 278–292.
  22. Ronayne, W. M. (2021). Local diversity: a cause for suspicion? Autonomy and cultural provision in Irish local government–a case study of Cork City Council.
  23. Saraswati, P. W. (2021). How National Public Policies in Indonesia Address Maternal Mortality from The Perspective of Health Equity and Intersectionality.
  24. Sebayang, A. F., & Sebayang, L. K. (2020). Infrastructure investment and its impact to regional development. Economics Development Analysis Journal, 9(3), 269–280.
  25. Suhendra, I., Istikomah, N., Ginanjar, R. A. F., & Anwar, C. J. (2020). Human capital, income inequality and economic variables: A panel data estimation from a region in Indonesia. The Journal of Asian Finance, Economics and Business, 7(10), 571–579.
  26. Suprapto, H. A., Sumaryoto, S., & Saleh, S. (2022). The effect of investment on economic growth and human development index and community welfare (case study in Bekasi Regency). International Journal of Economics, Business and Accounting Research (IJEBAR), 6(1), 891–901.
  27. Susilawati, S., & Didiharyono, D. (2023). Application of Principal Component Regression in Analyzing Factors Affecting Human Development Index. Jurnal Varian, 6(2), 199–208.
  28. Syam, A. Y., & Chandrarin, G. (2019). Effects of Fiscal Health on Human Development Index in Indonesia: Regional Government Performance Mediating Role. International Journal of Innovative Science and Research Technology, 4(10), 50–59.
  29. Syarifuddin, F., & Setiawan, M. (2022). The Relationship between COVID-19 Pandemic, Foreign Direct Investment, and Gross Domestic Product in Indonesia, Sustainability. 2022; 14 (5): 2786. s Note: MDPI stays neutral with regard to jurisdictional claims in published .
  30. Tri, N. M. (2023). Impact of industrial revolution 4.0 to the vietnamese cultural development: a systematic review. Scientific Culture, 9(1).

Downloads

PDF

Statistic

Abstract Views
: 87 times
PDF
: 37 times