Local Government Strategy and Foreign Direct Investment (FDI) level: Case Studies of Sleman and Kulon Progo district, Yogyakarta Special Region (DIY)

The research objective was to determine the extent to which local government strategy influences FDI level in Sleman and KulonProgo districts. The research was a qualitative one that used data and information that were obtained from government documents, macroeconomic indicators from local government statistics offices, interviews with relevant officials responsible and knowledgeable about investment in general and FDI in particular. Research findings found no evidence of local government strategy that was specifically tailored toward attracting FDI to the respective district. However, there is abundant evidence that determinants of FDI are in line with previous research results and theory. The results show that the key factors that have influenced a greater number of FDI to locate more of their production facilities in Sleman than in Kulon Progo include accessibility, availability of skilled manpower, good infrastructure, a responsive investment regulatory regime, quality information on investment potential, active involvement of the district government in showcasing investment potential through local , national and international fora. The existence of agglomeration effects in Sleman district has also played an important role, if not the most important, in making Sleman more attractive as FDI destination than Kulon Progo district.