The effect of information & communication technology towards regional economic growth in Indonesia

Gunawan Indra
Doctoral Degree, Padjadjaran University. E-mail:indragun827@gmail.com

Cite this article:

Gunawan I., (2019) The effect of information & communication technology towards regional economic growth in Indonesia. Ed.: М.D. Baldzhy (ed.-in-ch.) and others [Systema pensiinoho zabezpechennia Ukrainy ta yevrointehratsiini protsesy; za red.: М. D. Baldzhy (gol. red.)], Scientific Bulletin of the Odessa National Economic University (ISSN 2313-4569), Odessa National Economics University, Odessa, No. 4(267), pp. 25-36.

Abstract

Nowadays, information and communication technology is becoming important part within the economic development. The rapid development of information and communication technology has changed the lifestyle of Indonesian society, either in rural or urban area. This occurred since the presence of the variety of social media applications spread rapidly. Furthermore, this development was automatically affected the growth of regional economy. This study observed the influence of information and communication technology towards regional economic growth in Indonesia that was represented by value of Gross Regional Domestic Product in 33 provinces in Indonesia in 2014 and 2015. The variable of information and communication technology was obtained by purposive sampling. The sample were cellular phone users, household with internet access, household that use internet access which represented by the household that accessed internet in last three months, household that had and could operated computer, and household that had wired telephone. This study examined each sample category and compared them to identify the effect toward Gross Regional Domestic Product. The data were processed using SmartPLS software version 3.2.7. The results showed that sample category that significantly affected Gross Regional Domestic Product was the household that used internet, while the other categories did not have significant influence. For every 1% enhancement of household growth that used internet would encourage 0.66% of Gross Regional Domestic Product. Even though, many household used internet access, it did not have positive impact on economic development if the internet was rarely used. Therefore, if a region wanted to improve its regional economic growth, it can be done by increasing the use of internet household.

Keywords

gross domestic product, regional product, information technology, communication technology, economic growth, internet access.

JEL classification: О330; DOI: 10.32680/2409-9260-2019-4-267-25-36

UD classification: 338.1

References

1. Pohjola M. (2002). The New Economy: Facts, Impacts and Policies. Information Economics and Policy 14(2): 133–144.
2. Oliner SD, Sichel DE. (2000).The resurgence of growth in the late 1990s: Is information technology the story? Journal of Economic Perspectives 14(4): 3–22.
3. Jorgenson DW, Stiroh KJ. (2000).Raising the speed limit: U.S. economic growth in the information age. Brookings Papers on Economic Activity 31(2000–1): 125–236.
4. Brynjolfsson E, Yang Sh. (1996). Information Technology and Productivity: A Review of the Literature. Advances, In Computers 43 February: 179–214.
5. Motohashi K. (1997). ICT diffusion And Its Economic Impact in OECD Countries. STI Reviews 20, p. 13–45.
6. Kraemer KL, Dedrick J. (2001). Information Technology and Productivity: Results and Implications of Cross-Country Studies. In Pohjola, M. (ed)., Information Technology and Economic Development, Oxford: Oxford University Press, p. 257–279. 36
7. Schreyer P. (2000). The Contribution of Information and Communication Technology to Output Growth: A Study of the G7 Countries. Working Paper, OECD Science, Technology and Industry, 2000/2, OECD Publishing.
8. BadanPusatStatistik. (2015).Statistik Telekomunikasi Indonesia.
9. Farhadi, M., Ismail, R., Fooladi, M. (2012). Information and Communication Technology Use and Economic Growth, PLoS ONE 7(11): e48903. DOI:10.1371/ journal.pone.0048903
10. Jalava, J., &Pohjola, M. (2002). Economic growth in the new economy: Evidence from advanced economies. Information Economics and policy, 14(2), 189-210.