Does Digital Readiness Affect Economic Growth?

Vini Ratna Sari Yugo, Bambang Juanda, Lukytawati Anggraeni

Abstract


This study aims to analyze the impact of digital readiness on economic growth and see the difference based on the level of state income using interaction dummy variables. Networked Readiness Index and its 16 individual indicators is used as a proxy for digital readiness. The research method used is panel data regression analysis covering 105 countries over a period of 4 years (2013-2016). Panel data regression analysis shows that public investment and labor force are significantly positive on economic growth, while inflation has a negative significant impact. Digital readiness is significantly positive on economic growth only in high-income countries but has a significant negative impact in middle and low-income countries. Indicators that have the greatest impact on economic growth are Government Procurement of Advanced Technology in high-income countries and Adult Literacy Rate in middle-income countries. Digital readiness cannot directly increase economic growth without adequate capital and labor factors. Governments of middle and low-income countries should focus more on ICT development, both through ICT infrastructure and the quality of human resources to take advantage of digital technology.


Keywords


digital readiness; economic growth; panel data

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DOI: https://doi.org/10.33258/birci.v4i4.2692

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This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.