Transforming Welfare Through Digital Connectivity: Empirical Evidence from Indonesia

Navi'ah Khusniati

doi:10.58526/jsret.v4i4.964

Authors

Navi'ah Khusniati Universitas Diponegoro

DOI:

https://doi.org/10.58526/jsret.v4i4.964

Keywords:

ICT, Poverty Alleviation, Indonesia

Abstract

The development of digital transformation offers considerable potential for poverty alleviation. This study examines the determinants of provincial poverty in Indonesia by analyzing panel data from 34 provinces over an eleven-year period. To obtain consistent and robust estimates in diagnostic test, a fixed effects estimator with Driscoll–Kraay standard errors is employed. The findings reveal that education has the most significant impact on poverty reduction, followed by internet access, electricity access, and economic growth, underscoring the critical role of human capital development and digital connectivity in improving household welfare. In contrast, unemployment, the expansion of oil palm plantations, and provincial GDP per capita are associated with notable increases in poverty, reflecting labor market inflexibilities and non-inclusive growth dynamics. The Gini index is not statistically significant, suggesting that short-term fluctuations in inequality do not substantially affect provincial poverty outcomes. These results highlight the need for policies that expand digital infrastructure, enhance educational attainment, and promote inclusive sectoral development while strengthening governance in resource-dependent regions.

Downloads

Download data is not yet available.

References

Adam, I. O., & Dzang Alhassan, M. (2020). Bridging the global digital divide through digital inclusion: the role of ICT access and ICT use. Transforming Government: People, Process and Policy, 15(4). https://doi.org/10.1108/TG-06-2020-0114

Adeleye, N., Osabuohien, E., & Bowale, E. (2017). The Role of Institutions in the Finance-Inequality Nexus in Sub-Saharan Africa. Journal of Contextual Economics – Schmollers Jahrbuch, 137(1–2). https://doi.org/10.3790/schm.137.1-2.173

Agyekum, F. K., Reddy, K., Wallace, D., & Wellalage, N. H. (2022). Does technological inclusion promote financial inclusion among SMEs? Evidence from South-East Asian (SEA) countries. Global Finance Journal, 53. https://doi.org/10.1016/j.gfj.2021.100618

Ahmad, A. H., Green, C., & Jiang, F. (2020). MOBILE MONEY, FINANCIAL INCLUSION AND DEVELOPMENT: A REVIEW WITH REFERENCE TO AFRICAN EXPERIENCE. Journal of Economic Surveys, 34(4). https://doi.org/10.1111/joes.12372

Al-Mursyid, A. R. (2020). PENGARUH PEMBANGUNAN TEKNOLOGI INFORMASI DAN KOMUNIKASI TERHADAP PEMBANGUNAN KAWASAN TIMUR INDONESIA. Jurnal Ekonomi Pembangunan STIE Muhammadiyah Palopo, 5(2). https://doi.org/10.35906/jep01.v5i2.372

Andrian, T., Herlina Sitorus, N., Febriana MK, I., & Willy Chandra, S. (2021). Financial inclusion and it’s effect on poverty in Indonesia. Jurnal Paradigma Ekonomika, 16(1). https://doi.org/10.22437/jpe.v16i1.12083

Asfaw, S., Kassie, M., Simtowe, F., & Lipper, L. (2012). Poverty Reduction Effects of Agricultural Technology Adoption: A Micro-evidence from Rural Tanzania. Journal of Development Studies, 48(9). https://doi.org/10.1080/00220388.2012.671475

Asongu, S. A., & Tchamyou, V. S. (2016). Inequality, Finance and Pro-Poor Investment in Africa. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2713088

Asongu, S., Amari, M., Jarboui, A., & Mouakhar, K. (2021). ICT dynamics for gender inclusive intermediary education: Minimum poverty and inequality thresholds in developing countries. Telecommunications Policy, 45(5). https://doi.org/10.1016/j.telpol.2021.102125

Berg, A. G., & Ostry, J. D. (2017). Inequality and Unsustainable Growth: Two Sides of the Same Coin? IMF Economic Review, 65(4). https://doi.org/10.1057/s41308-017-0030-8

Budiarti, W., & Khoirunnisa. (2019). Pengaruh Tekonologi Informasi dan Komunikasi terhadap Tingkat Kemiskinan di Indonesia tahun 2012-2017. Seminar Nasional Official Statistics, 2019(1), 759–768.

Castellanos-Navarrete, A., de Castro, F., & Pacheco, P. (2021). The impact of oil palm on rural livelihoods and tropical forest landscapes in Latin America. In Journal of Rural Studies (Vol. 81). https://doi.org/10.1016/j.jrurstud.2020.10.047

Chege, S. M., & Wang, D. (2020). Information technology innovation and its impact on job creation by SMEs in developing countries: an analysis of the literature review. Technology Analysis and Strategic Management, 32(3). https://doi.org/10.1080/09537325.2019.1651263

Cheng, C. Y., Chien, M. S., & Lee, C. C. (2021). ICT diffusion, financial development, and economic growth: An international cross-country analysis. Economic Modelling, 94. https://doi.org/10.1016/j.econmod.2020.02.008

Cho, J., de Zúñiga, H. G., Rojas, H., & Shah, D. V. (2003). Beyond access: The digital divide and Internet uses and gratifications. IT & Society, 1(4).

De Janvry, A., & Sadoulet, E. (2002). World poverty and the role of agricultural technology: Direct and indirect effects. Journal of Development Studies, 38(4). https://doi.org/10.1080/00220380412331322401

Dollar, D., & Kraay, A. (2002). Growth is good for the poor. Journal of Economic Growth, 7(3). https://doi.org/10.1023/A:1020139631000

Dzator, J., Acheampong, A. O., Appiah-Otoo, I., & Dzator, M. (2023). Leveraging digital technology for development: Does ICT contribute to poverty reduction? Telecommunications Policy, 47(4). https://doi.org/10.1016/j.telpol.2023.102524

Ejemeyovwi, J. O., & Osabuohien, E. S. (2020). Investigating the relevance of mobile technology adoption on inclusive growth in West Africa. Contemporary Social Science, 15(1). https://doi.org/10.1080/21582041.2018.1503320

Elisabeth Beaunoyer, Sophie Dupere, & Matthieu J.Guitton. (2020). COVID-19 and digital inequalities. In Computers in Human Behavior 111 (2020) 106424.

Erlando, A., Riyanto, F. D., & Masakazu, S. (2020). Financial inclusion, economic growth, and poverty alleviation: evidence from eastern Indonesia. Heliyon, 6(10). https://doi.org/10.1016/j.heliyon.2020.e05235

Fauzan, I. F., Firdaus, M., & Sahara, S. (2020). Regional financial inclusion and poverty: Evidence from Indonesia. Economic Journal of Emerging Markets, 12(1). https://doi.org/10.20885/ejem.vol12.iss1.art3

Giller, K. E., Delaune, T., Silva, J. V., Descheemaeker, K., van de Ven, G., Schut, A. G. T., van Wijk, M., Hammond, J., Hochman, Z., Taulya, G., Chikowo, R., Narayanan, S., Kishore, A., Bresciani, F., Teixeira, H. M., Andersson, J. A., & van Ittersum, M. K. (2021). The future of farming: Who will produce our food? In Food Security (Vol. 13, Issue 5). https://doi.org/10.1007/s12571-021-01184-6

Gómez-Carmona, O., Buján-Carballal, D., Casado-Mansilla, D., López-de-Ipiña, D., Cano-Benito, J., Cimmino, A., Poveda-Villalón, M., García-Castro, R., Almela-Miralles, J., Apostolidis, D., Drosou, A., Tzovaras, D., Wagner, M., Guadalupe-Rodriguez, M., Salinas, D., Esteller, D., Riera-Rovira, M., González, A., Clavijo-Ágreda, J., … Bujalkova, N. (2023). Mind the gap: The AURORAL ecosystem for the digital transformation of smart communities and rural areas. Technology in Society, 74. https://doi.org/10.1016/j.techsoc.2023.102304

Harmáček, J., Syrovátka, M., & Dušková, L. (2017). Pro-poor growth in East Africa. Quarterly Review of Economics and Finance, 64. https://doi.org/10.1016/j.qref.2016.07.002

Islam, M. M., & Hasan, M. (2023). Empowering Human Development: Bridging the Skills Gap for IR 4.0 through Digital Transformation addressing ICT, IoT, and Artificial Intelligence. International Journal of Engineering Research in Computer Science and Engineering (IJERCSE), 10(10).

Jamil, H. (2022). LESS INCLUSIVE GROWTH IN INDONESIA? THE UNINTENDED CONSEQUENCES OF INTERNET PENETRATION. Jurnal Ekonomi Bisnis Dan Kewirausahaan, 11(2). https://doi.org/10.26418/jebik.v11i2.53871

Kakwani, N., Prakash, B., & Son, H. (2000). Growth, inequality, and poverty: An introduction. Asian Development Review, 18(2). https://doi.org/10.1142/s0116110500000063

Korkmaz, Ö., Erer, E., & Erer, D. (2022). Internet access and its role on educational inequality during the COVID-19 pandemic. Telecommunications Policy, 46(5). https://doi.org/10.1016/j.telpol.2022.102353

Kouladoum, J. C., Wirajing, M. A. K., & Nchofoung, T. N. (2022). Digital technologies and financial inclusion in Sub-Saharan Africa. Telecommunications Policy, 46(9). https://doi.org/10.1016/j.telpol.2022.102387

Lashitew, A. A., van Tulder, R., & Liasse, Y. (2019). Mobile phones for financial inclusion: What explains the diffusion of mobile money innovations? Research Policy, 48(5). https://doi.org/10.1016/j.respol.2018.12.010

Li, R., Chen, K., & Wu, D. (2020). Challenges and Opportunities for Coping with the Smart Divide in Rural America. Annals of the American Association of Geographers, 110(2). https://doi.org/10.1080/24694452.2019.1694402

Mhlanga, D., Denhere, V., & Moloi, T. (2022). COVID-19 and the Key Digital Transformation Lessons for Higher Education Institutions in South Africa. Education Sciences, 12(7). https://doi.org/10.3390/educsci12070464

Mushtaq, R., & Bruneau, C. (2019). Microfinance, financial inclusion and ICT: Implications for poverty and inequality. Technology in Society, 59. https://doi.org/10.1016/j.techsoc.2019.101154

Niebel, T. (2018). ICT and economic growth – Comparing developing, emerging and developed countries. World Development, 104. https://doi.org/10.1016/j.worlddev.2017.11.024

Odhiambo, N. M., Owusu, E. L., & Asongu, S. A. (2023). Impact of Finance on Poverty Alleviation in Africa. In Finance for Sustainable Development in Africa. https://doi.org/10.4324/9781003215042-14

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). https://doi.org/10.1016/j.telpol.2022.102315

Phan, V. P. (2023). Is the internet penetration pro-poor? Evidence from a panel data analysis. Telecommunications Policy, 47(8). https://doi.org/10.1016/j.telpol.2023.102612

Pradhan, R. P., Arvin, M. B., Nair, M. S., Hall, J. H., & Bennett, S. E. (2021). Sustainable economic development in India: The dynamics between financial inclusion, ICT development, and economic growth. Technological Forecasting and Social Change, 169. https://doi.org/10.1016/j.techfore.2021.120758

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). https://doi.org/10.1016/j.iimb.2018.01.001

Pretty, J., & Bharucha, Z. P. (2014). Sustainable intensification in agricultural systems. In Annals of Botany (Vol. 114, Issue 8). https://doi.org/10.1093/aob/mcu205

Rashid Khan, H. U., Nassani, A. A., Aldakhil, A. M., Qazi Abro, M. M., Islam, T., & Zaman, K. (2019). Pro-poor growth and sustainable development framework: Evidence from two step GMM estimator. Journal of Cleaner Production, 206. https://doi.org/10.1016/j.jclepro.2018.09.195

Ravallion, M. (2001). Growth, inequality and poverty: Looking beyond averages. World Development, 29(11). https://doi.org/10.1016/S0305-750X(01)00072-9

Ravallion, M. (2012). Why don’t we see poverty convergence? In American Economic Review (Vol. 102, Issue 1). https://doi.org/10.1257/aer.102.1.504

Tchamyou, V. S., Asongu, S. A., & Odhiambo, N. M. (2019). The Role of ICT in Modulating the Effect of Education and Lifelong Learning on Income Inequality and Economic Growth in Africa. African Development Review, 31(3). https://doi.org/10.1111/1467-8268.12388

Tchamyou, V. S., Erreygers, G., & Cassimon, D. (2019). Inequality, ICT and financial access in Africa. Technological Forecasting and Social Change, 139. https://doi.org/10.1016/j.techfore.2018.11.004

Tchamyou, V. S., Erreygers, G., Cassimon, D., Olopade, B. C., Okodua, H., Oladosun, M., Asaleye, A. J., Hussain, A., Batool, I., Akbar, M., Nazir, M., Myovella, G., Karacuka, M., Haucap, J., Nchofoung, T. N., Asongu, S. A., Abdulqadir, I. A., Asongu, S. A., Abdullahi, I. A., … Olukowi, O. B. (2021). Technological Forecasting & Social Change Law , mobile money drivers and mobile money innovations in developing countries. Telecommunications Policy, 65(February).

Van Dijk, J. A. G. M. (2017). Digital Divide: Impact of Access. In The International Encyclopedia of Media Effects. https://doi.org/10.1002/9781118783764.wbieme0043

Van Roy, V., Vértesy, D., & Vivarelli, M. (2018). Technology and employment: Mass unemployment or job creation? Empirical evidence from European patenting firms. Research Policy, 47(9). https://doi.org/10.1016/j.respol.2018.06.008

Vu, K. M. (2017). ICT diffusion and production in ASEAN countries: Patterns, performance, and policy directions. Telecommunications Policy, 41(10). https://doi.org/10.1016/j.telpol.2017.04.005

Wan, G., Wang, C., & Zhang, X. (2021). The Poverty-Growth-Inequality Triangle: Asia 1960s to 2010s. Social Indicators Research, 153(3). https://doi.org/10.1007/s11205-020-02521-6

Wardhana, A., Kharisma, B., & Lisdiyanti, T. (2020). TEKNOLOGI INFORMASI KOMUNIKASI DAN PERTUMBUHAN EKONOMI WILAYAH BARAT DAN TIMUR INDONESIA PERIODE 2014-2018. E-Jurnal Ekonomi Dan Bisnis Universitas Udayana. https://doi.org/10.24843/eeb.2020.v09.i11.p05

Wonyra, K. O., Sanoussi, Y., Sy, I., & Lanie, T. (2021). Inequalities of opportunity in the access and use of telecommunication services in Togo. Telecommunications Policy, 45(5). https://doi.org/10.1016/j.telpol.2021.102123

Wooldridge, J. M. (2013). Introductury Econometrics A Modern Approch 5th Edition. In South-Western, Cengange Learning.

Ziemba, E. W., & Grabara, D. (2024). Sustainability Affected by ICT Adoption in Enterprises. Journal of Computer Information Systems. https://doi.org/10.1080/08874417.2024.232152