International Journal of Business and Management Invention ISSN (Online): 2319 – 8028, ISSN (Print): 2319 – 801X www.ijbmi.org || Volume 4 Issue 5|| May. 2015 || PP-17-25 www.ijbmi.org 17 | Page Association between Investment, Production, Export and Import: The Impact of Labor Force Absorption in Indonesia Andi Sessu (Faculty of economics and business UHAMKA Jakarta) ABSTRACT : This study produced several important findings, namely: (a) trade, especially foreign trade (exports and imports) and domestic production which increases the expansion of employment opportunities; (b) economic growth as measured by the growth of production and growth in investment showed an influence on the improvement of employment opportunities; and (c) Simultaneously, export, import, production and investment have a significant effect on employment. In connection with this, the Central Government of the Republic of Indonesia must continue to promote investment, especially sector Agroindustry and other agriculture-based industries, including fertilizer and pesticide industries. Imports of used clothing and used tires must be stopped to allow the national industry sector to recover profitable economic capacity. The agricultural sector must still get attention, especially food crops such as soybean, corn and rice and fruit to strengthen national food agriculture and agriculture-based industries as well as save on foreign exchange KEYWORDS : Export, Import, Production, Investment and Labor Absorption I. INTRODUCTION The integration of the world economy and trade policy is essential for development, job creation and poverty alleviation (Trade and Development Commission, UNCTAD, 2013). Foreign Direct Investment (FDI) has been shown to have encouraged local and regional economic growth, especially in developing countries in Asia, Africa and Latin America. It is to create jobs and alleviate poverty (Tambunan, 2005). The success of the economic development of a country is characterized by two main things, namely economic growth and poverty reduction. To alleviate this poverty, require job growth and an increase in income per capita (Jonaidi, 2012; Susilo, 2013). Associated with the condition of Indonesia, a major problem faced is the phenomenon of labor surplus economy, a country which population growth is greater than the growth of their employment. Therefore, appropriate economic policies implemented in Indonesia are to encourage economic sectors which can immediately increase employment opportunities. The growth of industrial sector should be encouraged, especially subsector Agroindustry (agriculture based industries). The development of agriculture-based industries will contribute double benefits. In addition increasing the added value of agricultural products, agricultural employment and industrial sector will also increase. Along with it, the income of farmers is encouraged to increase in the future thus simultaneously reducing poverty. According to Fei-Ranis models, shifting agricultural labor to the industrial sector took place in three stages based on the marginal physical product (MPP) and wages which assumed to be constant and exogenously determined. In the first stage, despite the transfer of power from agricultural sector to industrial sector, agricultural production will not fall because, agricultural laborers are redundant. In the second stage, the production of the agricultural sector began to decline because labor MPP had positive start. In the third stage is the stage of commercialization of the two sectors of the economy. MPP labor becomes higher than the level of wages. Agricultural producers will maintain its workforce thus each sector seeks to be streamlined. Transfer will continue to happen if the technological innovation in the agricultural sector can boost labor MPP (Kariyasa, 2006).Based on the ideas that have been put forward, then the following is the distribution of employment by economic sector: