The Effect of Digital Infrastructure Development on Regional Economic Growth in Indonesia
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Abstract
This study investigates the effect of digital infrastructure development on regional economic growth in Indonesia using a spatial econometrics approach. The rapid expansion of digital infrastructure, such as internet networks, broadband access, and digital services, has transformed regional economic activities and created new opportunities for growth. However, disparities in infrastructure distribution remain a challenge for achieving inclusive development. This research employs panel data from 34 provinces in Indonesia between 2015 and 2023, combined with spatial autoregressive (SAR) and spatial error models (SEM), to analyze the spatial dependence of regional growth. The findings reveal that digital infrastructure has a significant positive effect on regional economic growth, both directly and through spatial spillover effects on neighboring regions. Provinces with advanced digital infrastructure not only experience higher growth rates but also contribute to economic expansion in adjacent areas. Moreover, the study highlights the importance of government policies in reducing digital divides to ensure equitable economic outcomes. The results support the argument that digital infrastructure is a strategic driver of regional development in the digital era. Strengthening spatially inclusive digital policies will accelerate regional economic transformation, reduce inequality, and enhance Indonesia’s competitiveness in the global economy. This study contributes to the literature on digital economy and spatial econometrics by providing empirical evidence of the link between digital infrastructure and regional economic performance in a developing country context.
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