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Abstract

Economic growth is one of the macro-economic indicators that show the level of welfare of a country. The factors that affect to economic growth is foreign direct investment, exchange rate and government expenditure. The purpose of this study was to determine the effect of foreign direct investment, exchange rate and government expenditure to economic growth in the short run and long run. Data collection technique used documentation. Data were analyzed using Vector Error Correction Model (VECM) and cointegration test. The results of this study were (1) there is no short run impact of variables foreign direct investment, exchange rate and the government expenditure to economic growth in Indonesia in 1986—2015 and (2) there is a long run effect of variables foreign direct investment, exchange rate and government expenditure to economic growth in Indonesia in 1986—2015.

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