Title: The role of macroeconomic factors and development indicators in attracting foreign direct investment: an empirical study of upper middle-income countries

Authors: Muhammad Budi Utama; Farawi Ghannili; Moh. Nurul Iman

Addresses: Institute for Research and Community Service, Akademi Bisnis Lombok, 83352, Indonesia ' Faculty of Islamic Economics and Business, State Islamic University Sunan Kalijaga, 55281, Indonesia ' Faculty of Islamic Economics and Business, State Islamic University Sunan Kalijaga, 55281, Indonesia

Abstract: In recent years, foreign direct investment (FDI) has emerged as a significant source of capital for many countries around the world, offering various advantages. The magnitude of FDI benefits has led to intense global competition. The objective of this study is to analyse the factors driving FDI flows in upper-middle-income countries. The generalised method of moments (GMM) estimation approach was used to test the hypotheses with panel data for the period 2013-2022. Our findings confirm a positive relationship between inflation and HDI, a negative relationship between GDP, AL, and CTR, and no relationship for the other variables. The results of this study indicate that governments should focus on policies that balance the attractiveness of FDI and the benefits received by the country, especially its citizens. This includes maintaining stable inflation rates, increasing HDI, and reconstructing tax policies with a more equitable distribution of tax rates.

Keywords: upper middle-income; FDI; foreign direct investment; urban population; arable land; corporate tax rates.

DOI: 10.1504/IJTGM.2026.153769

International Journal of Trade and Global Markets, 2026 Vol.22 No.1, pp.57 - 80

Received: 09 Feb 2025
Accepted: 20 Jul 2025
Published online: 26 May 2026 *

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