Adhitya Wardhana, Bayu Kharisma, M. Zidan Fauzy, Adrian Kevianta Anggana

The transformative impact of information and communication technology on regional economies in Indonesia

Introduction

The transformative impact of information and communication technology on regional economies in indonesia. Discover the transformative impact of ICT on Indonesia's regional economies. This study (2012-2022) reveals how digital technology, government spending, and investment drive economic growth.

Abstract

The development of information communication technology (ICT) has made it easier for people to carry out activities. People's dependence on ICT has become greater, which impacts increasing per capita income, business efficiency, and costs. The impact of ICT causes the flow of goods and services to be more efficient so that economic growth can be faster. This study aims to analyze the effect of ICT on economic development across all provinces in Indonesia over the period 2012–2022. The data used in this study from the Central Bureau of Statistics and the DJPK or the Ministry of Finance of Indonesia and used Generalized Least Squares (GLS) model approach. The results shows the Information and Communication Technology Development Index as a proxy for ICT, government spending, and investment significantly affected economic growth in all provinces. The labor variable does not significantly affect economic growth. The investment variable has the power prediction on economic growth. Implication of the study the government needs to build digital infrastructure and government budget is more focused on digital literacy.

Review

The submitted manuscript, "The transformative impact of information and communication technology on regional economies in Indonesia," tackles a highly pertinent and contemporary issue in development economics. The focus on Indonesia, a large and geographically diverse nation undergoing rapid digital transformation, offers a valuable context for understanding the complex interplay between ICT adoption and regional economic growth. The study's clear objective to analyze the effect of ICT on economic development across all provinces over an extensive period (2012–2022) sets a solid foundation for robust empirical investigation into national and sub-national economic dynamics. The methodology employed leverages credible official data from the Central Bureau of Statistics and the Ministry of Finance, which strengthens the validity and reliability of the findings within the Indonesian context. The use of the Generalized Least Squares (GLS) model is an appropriate econometric choice for panel data analysis, effectively accounting for potential issues like heteroskedasticity and serial correlation commonly found in such datasets. The key results indicate that the Information and Communication Technology Development Index, government spending, and investment are significant determinants of economic growth across Indonesian provinces. Interestingly, the study finds no significant effect from the labor variable, while highlighting investment as a particularly powerful predictor of economic growth. This study's primary strength lies in its empirical grounding, utilizing comprehensive data from a major developing economy to investigate a critical topic. The findings, especially the strong influence of ICT, government spending, and investment, provide compelling evidence for strategic policy formulation. While the abstract effectively outlines the main results, a more detailed explanation of the ICT Development Index's composition would enhance its interpretability. Nevertheless, the derived policy implications—advocating for enhanced digital infrastructure and targeted digital literacy programs—are highly relevant and actionable, offering clear guidance for the Indonesian government to strategically foster inclusive and accelerated regional economic development through digital transformation.

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