Dynamic Analysis On Export, FDI and Growth in Indonesia: An Autoregressive Distributed Lag (ARDL) Model

Mahrus Lutfi Adi Kurniawan, Indanazulfa Qurrota A'yun


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.


ARDL, Export-led growth hypothesis, Trade liberalization

Full Text:



Baharumshah, A. Z., & Thanoon, M. A. M. (2006). Foreign capital flows and economic growth in East Asian countries. China Economic Review, 17(1), 70–83. https://doi.org/10.1016/j.chieco.2005.09.001

Belloumi, M. (2014). The relationship between trade, FDI and economic growth in Tunisia: an application of the autoregressive distributed lag model. Economic System, (38), 269–287.

Boyd, J. H., & Smith, B. D. (1992). Intermediation and the equilibrium allocation of investment capital. Implications for economic development. Journal of Monetary Economics, 30(3), 409–432. https://doi.org/10.1016/0304-3932(92)90004-L

Febiyansah, P. T. (2017). INDONESIA’S FDI – EXPORTS – GDP GROWTH NEXUS: TRADE OR INVESTMENT - DRIVEN? Buletin Ekonomi Moneter Dan Perbankan, 19(4), 469–488. https://doi.org/10.21098/BEMP.V19I4.696

Habibullah, M. S., Din, B. H., & Abdullah, H. (2012). Boder effects: the cases for states of Northen Malaysia and provinces of Southern Thailand. Journal of International Economic Review, 5(1), 15–27.

Hansen, H., & Rand, J. (2006). On the causal links between FDI and growth in developing countries. World Economy, 29(1), 21–41. https://doi.org/10.1111/J.1467-9701.2006.00756.X

Lim, S. Y., & Ho, C. M. (2013). Nonlinearity in ASEAN-5 export-led growth model: Empirical evidence from nonparametric approach. Economic Modelling, 32(1), 136–145. https://doi.org/10.1016/j.econmod.2013.01.044

Marc, A. (2011). Is foreign direct invesment a cure for economic growth in developing countries? structural model estimation applied to the case of the south shore Mediterranean countries. Journal of International Business and Economics, 11(4).

Marwan, N. F., Kadir, N. A. A., Hussin, A., Zaini, A. A., Ab.Rashid, M. E., & Helmi, Z. A. G. (2013). Export, Aid, Remittance and Growth: Evidence from Sudan. Procedia Economics and Finance, 7, 3–10. https://doi.org/10.1016/s2212-5671(13)00211-6

Narayan, P. K., Narayan, S., Prasad, B. C., & Prasad, A. (2007). Export-led growth hypothesis: Evidence from Papua New Guinea and Fiji. Journal of Economic Studies, 34(4), 341–351. https://doi.org/10.1108/01443580710826380

Narayan, P. K., & Smyth, R. (2005). Trade liberalization and economic growth in Fiji. An empirical assessment using the ARDL approach. Journal of the Asia Pacific Economy, 10(1), 96–115. https://doi.org/10.1080/1354786042000309099

Pahlavani, M., Wilson, E., & Worthingt, A. C. (2005). Trade-GDP Nexus in Iran: An Application of the Autoregressive Distributed Lag (ARDL) Model. American Journal of Applied Sciences, 2(7), 1158–1165. https://doi.org/10.3844/ajassp.2005.1158.1165

Pástor, Ľ., & Veronesi, P. (2012). Uncertainty about government policy and stock price. The Journal of Finance, 67(4), 1219–1264.

Pesaran, H. M., dan Pesaran, B. (1997). Working with microft 4.0: interactive econometric analysis. In Oxford University Press. Oxford.

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326. https://doi.org/10.1002/JAE.616

Phillips, P. C. B., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335–346. https://doi.org/10.1093/BIOMET/75.2.335

Reppas, P. A., & Christopoulos, D. K. (2005). The export-output growth nexus: Evidence from African and Asian countries. Journal of Policy Modeling, 27(8), 929–940. https://doi.org/10.1016/J.JPOLMOD.2005.06.007

Ridzuan, A. R., Mohd Noor, A. H., & Ahmed, E. M. (2016). ASEAN4 prospective of export-led economic growth. Journal of Business Management and Economics, 7(1), 001–012. https://doi.org/10.18685/ejbme(7)1_ejbme-15-018

Sahin, D. (2016). The export-led growth: a case study of China. The Journal of International Social Research, 9(40), 1653–1657.

Saimul, S., & Darmawan, A. (2020). Understanding Causality Relation among FDI, Foreign Trade and Economic Growth. Economics Development Analysis Journal, 9(4), 414–426. https://doi.org/10.15294/EDAJ.V9I4.39044

Sunde, T. (2017). Foreign direct investment, exports and economic growth: ADRL and causality analysis for South Africa. Research in International Business and Finance, 41, 434–444. https://doi.org/10.1016/J.RIBAF.2017.04.035

Tang, C. F., Lai, Y. W., & Ozturk, I. (2015). How stable is the export-led growth hypothesis? Evidence from Asia’s four little dragons. Economic Modelling, 44, 229–235. https://doi.org/10.1016/J.ECONMOD.2014.09.022

Tekin, R. B. (2012). Economic growth, exports and foreign direct investment in Least Developed Countries: A panel Granger causality analysis. Economic Modelling, 29(3), 868–878. https://doi.org/10.1016/J.ECONMOD.2011.10.013

Tintin, C. (2012). Does foreign direct invest spur economic growth and development? a comparative study. Physical Education and Sport for Children and Youth with Special Needs Researches – Best Practices – Situation, 1–53.

Tiwari, A. K., & Mutascu, M. (2011). Economic Growth and FDI in Asia: A Panel-Data Approach. Economic Analysis and Policy, 41(2), 173–187. https://doi.org/10.1016/S0313-5926(11)50018-9

Xu, Z. (1996). On the causality between export growth and GDP growth: An empirical reinvestigation. Review of International Economics, 4(2), 172–184. https://doi.org/10.1111/J.1467-9396.1996.TB00094.X

Yalta, A. Y. (2013). Revisiting the FDI-led growth Hypothesis: The case of China. Economic Modelling, 31(1), 335–343. https://doi.org/10.1016/j.econmod.2012.11.030

DOI: http://dx.doi.org/10.14414/jebav.v24i3.2717


  • There are currently no refbacks.

Copyright (c) 2022 Journal of Economics, Business, & Accountancy Ventura

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Abstracting & Indexing


Hasil gambar untuk ccbyncsa

Copyright @ 2010 Pusat Penelitian dan Pengabdian Masyarakat Sekolah Tinggi Ilmu Ekonomi (PPPM STIE)