Re-examining infrastructure-led growth theory: The role of telecommunication on growth in Indonesia
Abstract
This study re-examines the infrastructure-based growth theory by assessing the contribution of telecommunications to regional economic growth in Indonesia. Panel data from 34 provinces during the period 2018–2022 were analyzed using panel data regression; Chow and Hausman tests selected the fixed effects model. The dependent variable is the log of gross regional domestic product, while the independent variables include foreign direct investment, gross fixed capital formation, labor force, number of base transceiver stations, and telecommunications network performance. The results show that base transceiver stations, telecommunications network performance, and gross fixed capital formation have a positive and significant effect, while foreign direct investment has a negative effect and labor force is insignificant. These findings confirm the importance of digital infrastructure in increasing productivity and market integration, but at the same time highlight the connectivity gap between provinces. Policies need to prioritize improving network quality and equitable development of telecommunications infrastructure in disadvantaged areas.
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Burnham, J. B. (2007). Telecommunications policy in Turkey: Dismantling barriers to growth. Telecommunications Policy, 31(3–4), 197–208.
Cieslik, A., & Kaniewsk, M. (2004). Telecommunications infrastructure and regional economic development: The case of Poland. Regional Studies, 38(6), 713–725.
Correa, L. (2006). The economic impact of telecommunications diffusion on UK productivity growth. Information Economics and Policy, 18(4), 385–404.
Cotter, C., Rousseau, P. L., & Vu, N. T. (2021). Electrification, telecommunications, and the finance-growth nexus: Evidence from firm-level data. Energy Economics, 94, 105073.
Greene, W. H. (2008). Econometric Analysis (6th ed.). Prentice Hall.
Gujarati, D. N., Porter, D. C., & Pal, M. (2019). Basic Econometrics (Sixth Edit). Mc Graw Hill.
Kang, M. H., & Kim, S. (2025). Resilience in telecommunications networks: A Korean case study. Telecommunications Policy, 49(6), 102987.
Khasanah, D. U., & Kurniawan, M. L. A. (2025). Panel seemingly unrelated regression on employment in tourism sector: Evidence in Central Java province. Eko-Regional: Jurnal Pembangunan Ekonomi Wilayah, 19(1), 11–19.
Kuiper, C. S., & Beverly, J. L. (2025). Assessing telecommunication vulnerabilities to wildfire in Alberta, Canada. International Journal of Disaster Risk Reduction, 120, 105761.
Lam, P.-L., & Shiu, A. (2010). Economic growth, telecommunications development and productivity growth of the telecommunications sector: Evidence around the world. Telecommunications Policy, 34(4), 185–199.
Lechman, E., & Anacka, H. (2022). Digitalization Process and Its Impact on Economic Growth: A Panel Data Study for Developing Countries. In Digitalization and Economic Development: Insights from Developing Countries (pp. 28–46).
Lee, S. T., Gholami, R., & Tong, T. Y. (2005). Time series analysis in the assessment of ICT impact at the aggregate level – Lessons and implications for the new economy. Information and Management, 42(7), 1009–1022.
Magomedov, I. A., Murzaev, H. A., & Bagov, A. M. (2020). The role of digital technologies in economic development. IOP Conference Series: Materials Science and Engineering, 862(5).
Maneejuk, P., & Yamaka, W. (2020). An analysis of the impacts of telecommunications technology and innovation on economic growth. Telecommunications Policy, 44(10), 102038.
Mohmand, Y. T., Wang, A., & Saeed, A. (2017). The impact of transportation infrastructure on economic growth: empirical evidence from Pakistan. Transportation Letters, 9(2), 63–69. https://doi.org/10.1080/19427867.2016.1165463
Ngundu, M., Zerihun, M. F., & Nyathi, M. C. (2024). Comparing the effectiveness of the African Growth and Opportunity Act (AGOA) and Forum on China-Africa Cooperation (FOCAC) in South Africa: An application of Keynes’ Macroeconomic Theory. Asia and the Global Economy, 4(2), 100081.
Nguyen, V. B. (2025). Digitalization’s divergent impact on FDI inflows: A comparative analysis between advanced and developing countries. Transnational Corporations Review, 17(3), 2001468.
Norton, S. W. (1992). Transaction costs, telecommunications, and the microeconomics of macroeconomic growth. Economic Development and Cultural Change, 41(1).
Pintor, L., Atzori, L., & Iera, A. (2025). Sustainability in telecommunication networks and Key Value Indicators: A survey. Computer Networks, 271, 111466.
Pradhan, R. P., Arvin, M. B., & Hall, J. H. (2016). Economic growth, development of telecommunications infrastructure, and financial development in Asia, 1991–2012. The Quarterly Review of Economics and Finance, 59, 25–38.
Pradhan, R. P., Arvin, M. B., Norman, N. R., & Bele, S. K. (2014). Economic growth and the development of telecommunications infrastructure in the G-20 countries: A panel-VAR approach. Telecommunications Policy, 38(7), 634–649.
Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5 Part 2: The Problem of Development: A Conference of the Institute for the Study of Free Enterprise Systems), 71–102.
Rothenberg, A. D., Wang, Y., & Chari, A. (2025). When regional policies fail: An evaluation of Indonesia’s Integrated Economic Development Zones. Journal of Development Economics, 176, 103503.
Roy, A. (2024). Impacts of economic development, globalization, and gross capital formation on natural resources rents: Evidence from India. Resources Policy, 97, 105259.
Tang, H. S.-C., & Lee, P. S. . (2003). Growth in adversity: non-economic factors in telecommunications development in China. Telematics and Informatics, 20(1), 19–33.
UNDP. (2011). Annual Report 2011: Preventing Crisis, Enabling Recovery.
Vikia, Y. M. (2023). The Solow-Swan theories: An empirical evidence in various Indonesia provinces. Optimum: Jurnal Ekonomi Dan Pembangunan, 13(2), 155–174.
Waburton, E. (2024). Nationalist enclaves: Industrialising the critical mineral boom in Indonesia. The Extractive Industries and Society, 20, 101564.
Wahyuni, R. N. T., Retnaningsih, & Yuliana, L. (2025). Heterogeneity of social returns to education across employess education levels in Indonesia. Eko-Regional: Jurnal Pembangunan Ekonomi Wilayah, 20(2), 202–213.
Ward, M. R., & Zheng, S. (2016). Mobile telecommunications service and economic growth: Evidence from China. Telecommunications Policy, 40, 89–101.
Yang, S., Vialle, P., & Whalley, J. (2025). Is disruption the second time around easier? The case of Iliad and the Italian telecommunications market. Telecommunications Policy, 49(8), 103013.
Published
2026-04-02
How to Cite
NITHOSYI, Aisyah Hashinatun; KURNIAWAN, Mahrus Lutfi Adi; PANJAWA, Jihad Lukis.
Re-examining infrastructure-led growth theory: The role of telecommunication on growth in Indonesia.
Eko-Regional: Jurnal Pembangunan Ekonomi Wilayah, [S.l.], v. 21, n. 1, apr. 2026.
ISSN 2620-8849.
Available at: <https://jos.unsoed.ac.id/index.php/er/article/view/19128>. Date accessed: 14 apr. 2026.
doi: https://doi.org/10.32424/er.v21i1.19128.
Section
Articles
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