The Role of Government Investment and Foreign Direct Investment on Business Development and Public Welfare of Papua Province

Abstract

The objectives of this research are: 1) Examine and analyze the influence of government investment and foreign direct investment toward business development, 2) Examine and analyze the influence of government investment and foreign direct private investment toward the welfare; 3) Examine and analyze the influence of business developments toward the public welfare; 4) Examine and analyze the influence of government investment and foreign direct investment to the welfare through business development. In this study used the theory of investment and economic growth, business development is a proxy of economic growth. The type of this research is explanation which explains the relationship between the study variables. The data used in this study is secondary data based on time series and panel data between 2007 and 2010. Analysis tools used in this research are the Path Analysis.The results showed that foreign direct investment is less significantly influence on the development of business and foreign direct investment have a significantly effect on the welfare. Public investment does not significantly influence the development of business and government investment significantly negative effect on the welfare. The development of business significantly influences the overall welfare. The development of business is a perfect mediating the effects of foreign direct investment to the welfare. Public investment is not developed in a sustainable manner can reduce the welfare of society.

Keywords: Government investment, Foreign Direct Investment, Business Development, Public Welfare.