350 Journal of Economics, Business, & Accountancy Ventura Vol. 24, No. 3, December – March 2022, pages 350 – 362 Dynamic Analysis On Export, FDI and Growth in Indonesia: An Autoregressive Distributed Lag (ARDL) Model Mahrus Lutfi Adi Kurniawan*, Indanazulfa Qurrota A’yun Universitas Ahmad Dahlan, Yogyakarta, D.I. Yogyakarta, Indonesia ARTICLE INFO Article history: Received : 14 September 2021 Revised : 20 January 2022 Accepted : 03 February 2022 JEL Classification: F21, F23, F43 Key words: ARDL, Export-led growth hypothesis, Trade liberalization DOI: 10.14414/jebav.v24i3.2717. A B S T R A C T This study aims to test the export-led-growth (ELG) hypothesis in Indonesia after the implementation of trade liberalization and analyze the relevance of policies that can be taken by the government. The data used in this study is time series data from 1970- 2020. The analysis method of this research uses the Autoregressive Distributed Lag (ARDL) model by applying three models. Model 1 shows that in the short term the ELG hypothesis is proven valid but in the long term the ELG hypothesis is invalid in Indonesia. This is reinforced in model 2 in both of short and long term that real GDP is insignificant to real exports. In the long term, model 2 shows that real exports have a positive effect on FDI and vice versa in model 3 that real GDP has no effect on FDI. The implementation of the results illustrates to policy makers that strong economic growth can attract export capabilities in Indonesia, but policies that are based on economic growth have vulnerabilities to global dynamics that can affect export activities and the investment climate in Indonesia, so export market diversification policies need to be implemented to be able to reach a wider market. From the investment side, it is necessary to carry out structural reforms (such as policies, financial systems, and infrastructure development) so that there is certainty for foreign investors to invest in Indonesia. A B S T R A K Penelitian ini bertujuan untuk menguji hipotesis export-led-growth (ELG) di Indonesia pasca diterapkannya liberalisasi perdagangan dan menganalisis relevansi kebijakan yang dapat ditempuh oleh pemerintah. Data yang digunakan dalam penelitian ini adalah data time series dari tahun 1970-2020. Metode analisis penelitian ini menggunakan model Autoregressive Distributed Lag (ARDL) dengan menerapkan tiga model. Model 1 menunjukkan bahwa dalam jangka pendek hipotesis ELG terbukti valid namun dalam jangka panjang hipotesis ELG invalid di Indonesia. Hal ini diperkuat pada model 2 baik dalam jangka pendek maupun jangka panjang, bahwa real GDP insignificant terhadap real ekspor. Dalam jangka panjang pada model 2 menunjukkan bahwa real ekspor berpengaruh positif terhadap FDI dan berlaku sebaliknya pada model 3 yaitu real GDP tidak berpengaruh terhadap FDI. Implementasi hasil penelitian memberikan gambaran kepada pemangku kebijakan bahwa pertumbuhan ekonomi yang kuat dapat mengatraksi kemampuan ekspor di Indonesia, namun kebijakan yang bertumpu pada pertumbuhan ekonomi memiliki kerentanan terhadap dinamika global yang dapat berpengaruh terhadap aktivitas ekspor dan iklim investasi di Indonesia, sehingga kebijakan diversifikasi pasar ekspor perlu segera diterapkan untuk dapat menjangkau pasar yang lebih luas. Dari sisi investasi, perlu dilakukan reformasi structural (seperti kebijakan, sistem keuangan, dan pembangunan infrastruktur) agar terdapat kepastian bagi investor asing dalam menanamkan modalnya di Indonesia. 1. INTRODUCTION Trade liberalization brought a new direction to promote export activities massively to boost economic growth. This activity led to the form of the Export Led Growth (ELG) Hypothesis. In other words, export activities are an essential factor for economic growth. The economist from classical David Ricardo developed a theory that export is an "engine of growth” on international trade. The debate about the determinants of economic growth is a topic that will continue to grow due to the various factors that affect it. Sahin (2016) predicts * Corresponding author, email address: mahrus.kurniawan@ep.uad.ac.id.