Impact of Information and Communication Technology on Economic Growth in Western and Eastern Region of Indonesia

Abstract

The three main components of economic growth are capital accumulation, population growth, and technological progress. One form of technology that is experiencing rapid development at the global and national levels is information and communication technology (ICT). ICT plays an important role in supporting the activities of actors in increasing output in the form of goods and services. This research aims to analyze the impact of ICT on economic growth in the western region of Indonesia (KBI) and the eastern region of Indonesia (KTI) using descriptive analysis and the Generalized Method of Moment (GMM) model during the 2016-2020 period. The research results show that the ICT variables for landline telephones, cellular telephones and government ICT spending have a significant effect in driving economic growth in the eastern region, while for the western region the ICT variables do not have a significant influence on economic growth. The western region has not been able to make maximum use of the implementation of cellular telephone technology or ICT spending in improving the economy. To obtain the benefits of ICT as an economic driver in each region, the role of policy makers is needed in encouraging ICT adoption in the productive sector and providing access and technological infrastructure that can reach all regions and all levels of society.