Internet Influencing Economic Growth: What and How Much? A Case Study of Indonesia Using Time Series Data (2001-2016)
6 Pages Posted: 31 Jul 2018
Date Written: May 31, 2018
Since internet is widely known by the people of Indonesia, internet users are continuously experiencing significant growth. The results of a recent survey of 2016 conducted by the Association of Internet Service Providers Indonesia (APJII) said that the number of internet users in 2016 reached 132.7 million people or equivalent to 51.7% of the Indonesia’s population. This fact is supported by the prediction of Godjali, et al, 2012 said that until 2020 the number of consumers spending their money to meet the demand for goods and services will increase significantly compared to spending money on basic necessities, and the technological developments will encourage them to do online transactions. Another potential comes from the results of a survey conducted by APJII, said that the reason people access the internet to do business is 8.5% or as many as 10.4 million people. This potential can encourage the emergence of new business models such as e-commerce and e-business, provide new jobs field, and entrepreneurs can easily expand the network marketing through the internet. All of these stages will result in an increase in economic performance that increases income and economic growth. This paper examined what and how much the impact of technology and internet usage for Indonesia's economic growth using the time series data from 2001 to 2016. Using the Vector Autoregressive Model by STATA 12, this economic growth is predicted by internet users, broadband subscription, internet servers, consumption, export, and foreign direct investment. The research’s result through the dimensional interpretation of IRF, it can be seen that impulse giving to Broadband Subscription and Internet User will have a positive impact on GDP for specific lags.
Keywords: Internet; Economic Growth; VAR Model; Indonesia.
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