Search

In the Industrial Revolution Era 4.0 as it is today, every economy is faced with increasingly fierce competition from the flow of goods / services, labor and capital. Free trade will be able to influence national income (GNP). Exports and investments are the key to national economic growth. High exports will increase state revenues to finance economic development. The capital inflow in the form of foreign direct investment (FDI) will also increase, moreover accompanied by information technology that is so fast making it easy for investors to explore information, all this will affect the amount of national income which ultimately determines the size of economic growth. One indicator of economic growth is the amount of national income. The amount of national income can be influenced by several factors including exports and investments made. Elasticity is a general concept used to see the response of a variable if other variables change. Through the concept of elasticity it will more clearly see the magnitude of the influence of the variable Foreign Investment (FDI) and Export (X) on National Income, in this case GDP. If the elasticity value is more than one (elastic), it is said to have a high influence or sensitivity (response). Conversely, if less than one (inelastic), the effect is small. The results of the calculation with the concept of elasticity show that when the Export and FDI variables increase, the GDP variable rises but not as much as the increase in Exports and FDI. The GDP response is small or a low response (inelastic). However, when the export and FDI variables go down, the GDP variable actually rises higher than changes in exports and FDI. This is influenced by factors besides Exports and FDI. Thus the magnitude of the response of GDP to changes in exports and FDI will affect therate of economic growth.