The Role of Digitalization on Sustainable Development: An Empirical Study of Indonesia
- Alfiani Farida — Faculty of Economy and Business, Andalas University, Padang, Indonesia, Indonesia
- Syafruddin Karimi — Faculty of Economy and Business, Andalas University, Padang, Indonesia, Indonesia
- Febriandi Prima Putra — Faculty of Economy and Business, Andalas University, Padang, Indonesia, Indonesia
- Publication History
- Published online: December 31, 2023
- DOI
- https://doi.org/10.35877/454RI.daengku2201
- Copyright
- Copyright (c) 2023 Alfiani Farida, Syafruddin Karimi, Febriandi Prima Putra
Abstract
This study empirically investigates the impact of digitalization on sustainable development achievement in Indonesia. The investigation draws upon secondary data, covering annual data from 34 provinces of Indonesia spanning from 2013 to 2021. Digitalization is proxied by the subindices of the Information and Communication Technology (ICT) Development Index (IP-TIK) published by the Central Statistic Agency (BPS), while the achievements of sustainable development are measured by a composite index employing 19 indicators covering economic, social, and environmental dimensions. Utilizing the System Generalized Method of Moment (SGMM), the results show that the promotion of access to ICT and gross fixed capital income appears to be a way of enhancing sustainable development achievement in the short and long run. Conversely, the increase in ICT usage and foreign direct investment have proved to significantly dampen the sustainable development achievement of Indonesia in the short and long run. Efforts are required to ensure equal access to ICT and to promote the utilization of ICT for productive purposes. Furthermore, strategies to attract foreign capital inflow should be paired with the reinforcement of sectoral and environmental regulations to address the adverse effects of foreign investment.
References (51)
- Ali, I., & Son, H. H. (2007). Measuring Inclusive Growth. Asian Development Review, 24(01), 11–31. https://doi.org/10.1142/S0116110507000024
- Aminata, J., Nusantara, D. I. K., & Susilowati, I. (2022). The Analysis of Inclusive Green Growth In Indonesia. Jurnal Ekonomi & Studi Pembangunan, 23(1), Layouting. https://doi.org/10.18196/jesp.v23i1.13811
- Arellano, M., & Bond, S. (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies, 58(2), 277. https://doi.org/10.2307/2297968
- Aslam, A., Naveed, A., & Shabbir, G. (2021). Is it an institution, digital or social inclusion that matters for inclusive growth? A panel data analysis. Quality & Quantity, 55(1), 333–355. https://doi.org/10.1007/s11135-020-01008-3
- Asongu, S. A. (2018). ICT, openness and CO2 emissions in Africa. Environmental Science and Pollution Research, 25(10), 9351–9359. https://doi.org/10.1007/s11356-018-1239-4
- Badan Perencanaan Pembangunan Nasional. (2014). Rencana pembangunan jangka menengah nasional (RPJMN) 2015-2019 (Vol. 2). Bappenas.
- Badan Perencanaan Pembangunan Nasional. (2020). Rencana pembangunan jangka menengah nasional 2020-2024. Jakarta: Bappenas.
- Badan Pusat Statistik. (2020). Statistik Indonesia 2020. BPS.
- Badan Pusat Statistik. (2021a). Indeks Pembangunan Teknologi Informasi dan Komunikasi 2021. BPS.
- Badan Pusat Statistik. (2021b). Statistik Lingkungan Hidup Indonesia 2021. BPS.
- Badan Pusat Statistik. (2022). Indeks Pembangunan Teknologi Informasi dan Komunikasi 2021. BPS.
- Baltagi, B. H. (2005). Econometric analysis of panel data (Vol. 4). Springer.
- Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115–143. https://doi.org/10.1016/S0304-4076(98)00009-8
- Bukht, R., & Heeks, R. (2017). Defining, conceptualising and measuring the digital economy. Development Informatics Working Paper, 68.
- Canh, N. P., Schinckus, C., Thanh, S. D., & Hui Ling, F. C. (2020). Effects of the internet, mobile, and land phones on income inequality and The Kuznets curve: Cross country analysis. Telecommunications Policy, 44(10), 102041. https://doi.org/https://doi.org/10.1016/j.telpol.2020.102041
- Dutu, R. (2016). Challenges and policies in Indonesia’s energy sector. Energy Policy, 98, 513–519. https://doi.org/https://doi.org/10.1016/j.enpol.2016.09.009
- Fay, M. (2012). Inclusive green growth: The pathway to sustainable development. World Bank Publications.
- Global Commission on the Economy and Climate. (2014). Better Growth, Better Climate: The New Climate Economy Report. GCEC.
- Global Green Growth Institute. (2015). Delivering Green Growth for a Prosperous Indonesia. Jakarta: GGGI.
- Hazmi, D. M., Karimi, S., & Muharja, F. (2023). Measuring and Determinants of Inclusive Growth: Evidence from Indonesia. Optimum: Jurnal Ekonomi Dan Pembangunan, 12(2), 135–154. https://doi.org/10.12928/optimum.v12i2.5984
- Heeks, R. (2016). Examining “Digital Development”: The Shape of Things to Come? SSRN Electronic Journal, 64. https://doi.org/10.2139/ssrn.3431739
- International Telecommunication Union. (2017). Measuring the Information Society Report 2017. ITU.
- Iyengar, N. S., & Sudarshan. (1982). A Method of Classifying Regions from Multivariate Data. Economic Political Weekly, 2047–2052.
- Jha, S., Sandhu, S. C., & Wachirapunyanont, R. (2018). Inclusive Green Growth Index: A New Benchmark for Quality of Growth. Asian Development Bank [ADB].
- Johnston, R. B. (2016). Transforming Our World: The 2030 Agenda for sustainable development. Arsenic Research and Global Sustainability - Proceedings of the 6th International Congress on Arsenic in the Environment, AS 2016, 12–14. https://doi.org/10.1201/b20466-7
- Kementerian Komunikasi dan Informatika. (2019). Perkembangan Ekonomi Digital di Indonesia: Strategi dan Sektor Potensial. Kemenkominfo.
- Kementerian Komunikasi dan Informatika. (2021). Status Literasi Digital Indonesia 2020: Hasil Survei Di 34 Provinsi. Jakarta: Kementerian Komunikasi Dan Informatika.
- Kusumaningrum, S., & Yuhan, R. J. (2019). Pertumbuhan Ekonomi Provinsi di Indonesia Berdasarkan Indeks Komposit Pertumbuhan Inklusif dan Faktor yang Memengaruhinya. Jurnal Ekonomi Dan Kebijakan Publik, 10(1), 1–17. https://doi.org/10.22212/jekp.v10i1.1150
- Lai, T. L., Small, D. S., & Liu, J. (2008). Statistical inference in dynamic panel data models. Journal of Statistical Planning and Inference, 138(9), 2763–2776.
- Le Hir, B. (2012). Capturing Information and Communication Technologies as a General Purpose Technology. Ecole Centrale Paris.
- Lestari, T. K., Santoso, D. B., & Saputra, P. M. A. (2022). Keterkaitan Globalisasi dengan Pertumbuhan Inklusif pada Negara-Negara Asean Berpendapatan Menengah. Buletin Ilmiah Litbang Perdagangan, 16(1), 79–102.
- Liderson, D. M., & Pasaribu, E. (2020). PEMBENTUKAN BIGGI DALAM MENGUKUR PERTUMBUHAN INKLUSIF HIJAU. Seminar Nasional Official Statistics, 2019(1), 266–274. https://doi.org/10.34123/semnasoffstat.v2019i1.84
- MASTEL, APJII, & ATSI. (2017). Digital Inclusion Index Indonesia 2017. Laporan Riset Digital Inclusion Indonesia. https://mastel.id/digital-inclusion-index-indonesia-2017/
- Mouthaan, M., Frenken, K., Piscicelli, L., & Vaskelainen, T. (2023). Systemic sustainability effects of contemporary digitalization: A scoping review and research agenda. Futures, 149, 103142. https://doi.org/https://doi.org/10.1016/j.futures.2023.103142
- Nchake, M. A., & Shuaibu, M. (2022). Investment in ICT infrastructure and inclusive growth in Africa. Scientific African, 17, e01293. https://doi.org/10.1016/j.sciaf.2022.e01293
- Ofori, I. K., & Asongu, S. A. (2021). ICT Diffusion, Foreign Direct Investment and Inclusive Growth in Sub-Saharan Africa. Telematics and Informatics, 65, 101718. https://doi.org/10.1016/j.tele.2021.101718
- Ofori, I. K., Osei, D. B., & Alagidede, I. P. (2022). Inclusive Growth in Sub-Saharan Africa: Exploring the Interaction Between ICT Diffusion, and Financial Development. Telecommunications Policy, 46(7), 102315.
- Organisation for Economic Cooperation and Development. (2008). Handbook on Constructing Composite Indicators: Methodology and User Guide. OECD Publishing.
- Øverby, H., & Audestad, J. A. (2021). Introduction to Digital Economics. Springer International Publishing. https://doi.org/10.1007/978-3-030-78237-5
- Park, Y., Meng, F., & Baloch, M. A. (2018). The effect of ICT, financial development, growth, and trade openness on CO2 emissions: an empirical analysis. Environmental Science and Pollution Research, 25(30), 30708–30719. https://doi.org/10.1007/s11356-018-3108-6
- Pradhan, R. P., Mallik, G., & Bagchi, T. P. (2018). Information communication technology (ICT) infrastructure and economic growth: A causality evinced by cross-country panel data. IIMB Management Review, 30(1), 91–103. https://doi.org/10.1016/j.iimb.2018.01.001
- Pujiati, A., Yanto, H., Dwi Handayani, B., Ridzuan, A. R., Borhan, H., & Shaari, M. S. (2023). The detrimental effects of dirty energy, foreign investment, and corruption on environmental quality: New evidence from Indonesia. Frontiers in Environmental Science, 10, 1074172.
- Reis, J., Amorim, M., Melão, N., Cohen, Y., & Rodrigues, M. (2020). Digitalization: A Literature Review and Research Agenda (pp. 443–456). https://doi.org/10.1007/978-3-030-43616-2_47
- Richmond, K., & Triplett, R. E. (2018). ICT and income inequality: a cross-national perspective. International Review of Applied Economics, 32(2), 195–214. https://doi.org/10.1080/02692171.2017.1338677
- Roodman, D. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. The Stata Journal, 9(1), 86–136. https://doi.org/10.1177/1536867X0900900106
- Salvatore, D. (2019). International economics. John Wiley & Sons.
- Schneider, M. (2018). Digitalization of Production, Human Capital, and Organizational Capital BT - The Impact of Digitalization in the Workplace: An Educational View (C. Harteis (ed.); pp. 39–52). Springer International Publishing. https://doi.org/10.1007/978-3-319-63257-5_4
- Stern, N. H. (2007). The economics of climate change: the Stern review. cambridge University press.
- Stiglitz, J. E. (2015). The Price of Inequality: How Today’s Divided Society Endangers Our Future. The Proceedings of the Joint Workshop on Sustainable Humanity Sustainable Nature Our Responsibility.
- Wang, N. (2020). Does Foreign Direct Investment Improve Inclusive Green Growth? Empirical Evidence from China. International Journal of Business Management and Finance Research, 3(1), 12–19. https://doi.org/10.53935/2641-5313.v3i1.39
- Zhu, S., & Ye, A. (2018). Does Foreign Direct Investment Improve Inclusive Green Growth? Empirical Evidence from China. Economies, 6(3), 44. https://doi.org/10.3390/economies6030044
Keywords
Citation
Farida, A., Karimi, S., & Putra, F. P. (2023). The Role of Digitalization on Sustainable Development: An Empirical Study of Indonesia. Daengku: Journal of Humanities and Social Sciences Innovation, 3(6), 1089–1099. https://doi.org/10.35877/454RI.daengku2201
PublishedDecember 31, 2023
Volume3 - 2023
Pages1089-1099
