Revenue Journal: Management and Entrepreneurship, vol. 2(2), pp. 29–35, 2024
Received 9 June 2024 / published 4 July 2024
https://doi.org/10.61650/rjme.v2i2.564

The Influence of Digital Technology On
Economic Growth In 8 Countries In
ASEAN
Diana Berliyani1*, Dedy Yuliawan1, Toto Gunarto1
1Universitas Lampung, Indonesia
*Corresponding author: dianaberlian5@gmail.com

KEYWORDS
Economic growth;
Individual Internet usage;
Foreign direct investment;
Average years of schooling

ABSTRACT This study explores the impact of individual internet usage, foreign direct
investment, and average schooling years on the ASEAN region's economic growth during
2014-2020. The panel regression analysis method was employed to analyze secondary
data obtained from the World Bank and UNDP. The results of the fixed-effects regression
model indicate that the variables of individual internet usage (IUI) and foreign direct
investment (FDI) have a positive and significant impact on economic growth. In contrast,
the average years of schooling (MYS) do not have a significant impact. These findings are
consistent with previous research findings indicating that internet usage and foreign direct
investment significantly contribute to economic growth in the region. However, the average
years of schooling do not significantly influence economic growth in this study's context.
The study shows that internet usage and foreign direct investment have a significantly
positive impact on economic growth in ASEAN, while the average years of schooling do not
have a significant effect. These findings imply that ASEAN economic development policies
should focus on enhancing technology infrastructure and investment environments and
reevaluating the education system.
© The Author(s) 2024

1. INTRODUCTION
As a process of production growth, economic
growth is one of the primary measures of a
country's development success. Many factors,
such as education, human capital, production,
and technology, influence economic growth.
According to Solow and Swan, economic
growth depends on increasing the supply of
production factors: capital accumulation,
labor, population, and technological progress.
Adam Smith's theory of economic growth,
Budiono (2000) states that production growth
includes an increase in population or human
resources, capital accumulation, specialization,

and division of labor. This includes increasing
domestic and international trade as well as
market expansion. As stated by Michael P.
Todaro and Stephen C. (Todaro, 2006),
investment that can improve the quality of
capital resources or human and material
resources so that it has an impact on increasing
the number of products produced is called
economic growth.
According to the new economic model,
technology is an endogenous factor of
economic growth. This is to the research

results. According to the new economic model,
technology is an internal component of
economic growth. This is based on research
findings (Habibi & Zabardast, 2020), which
compare the influence of digitalization and
education on economic growth in Middle
Eastern and OECD countries. This study was
conducted over 18 years, from 2000 to 2017.
The results show that technology positively
impacts the economic growth of Middle
Eastern and OECD countries but has a minor
impact on Internet users in the Middle East.
ASEAN is the best market for digital economic
growth. It is possible to say that the number of
Internet users continues to grow. The number
of smartphone users in ASEAN in 2014 reached
more than 70% of the total population, which
showed the most significant increase from
2013 to 2014. Overall, Malaysia had the highest
share in 2019 at 84.19%, followed by Thailand
at 66.65%, Indonesia at 47.69%, and the
Philippines at 43.03% (World Bank, 2022).
Due to the rapid development in ASEAN,
investors will be very interested in investing in
the digital economy and Industry 4.0
businesses in 2021. Direct investment from
foreign investors in this sector is expected to
increase gradually. According to Solow's
theory, a country can do many things to
encourage economic growth. According to
Solow, capital development is the engine of
economic growth, and higher capital
accumulation increases economic growth.
Arostow explained that investment is one of
the essential requirements when entering the
startup world. This is to Harrod Dormer's
investment theory, which emphasizes the role
of investment in driving economic growth
because economic output increases through
increasing income and income (Jhingan, 2016).
However, the Human Development Index
(HDI) is another factor that supports and
correlates with foreign investment and
economic growth. The HDI value of a country
shows that the country is better off, according
to (Subandi, 2016), the elements that influence
the economic growth of a country or society,
including capital accumulation, which includes
all new investments in the form of land,
physical equipment and human resources
(man). Investing in IPM is primarily in

environmental conditions to create good and
effective habits.
Singapore has the highest HDI, with a score of
0.95 in 2022, according to data released by the
National Development Program (UNDP, 2022).
Brunei Darussalam and Malaysia have higher
HDI scores than other ASEAN countries, 0.82
and 0.81, respectively. The annual HDI value in
East Timor is the lowest, with 0.57, while the
HDI value in Indonesia is 0.71.
A study of how information and
communications technology contributes to
economic development in 35 Asian countries
classified the countries into lower-middleincome, upper-middle-income, and highincome groups based on income. The study
results
show
that
information
and
communication technology has made a
significant contribution to the economic
development of these countries, with different
impacts at various levels of the economy,
among the three highest levels. This research
forms the basis of the present study, which
aims to verify previous research's validity and
further develop those findings.
Not many studies or research papers examine
the Human Development Index (HDI) using the
average years of schooling as an indicator.
However, many exciting results exist from
previous research and statistical data analysis.
This research was conducted in the ASEAN
region for seven years, from 2014 to 2020. This
research aims to discover and analyze how
Individual Internet Users, Average Years of
Schooling, and Foreign Direct Investment
Influence Economic Growth in the region.

2. LITERATURE REVIEW
Technology
Engineering is a process that produces added
value. In this process, the resulting product is
used or made, becoming an integral part of the
system because it cannot be separated from
other products (Miarso, 2007). Over the past
thirty years, the rapid growth of information
and communication technology worldwide
has attracted many economists and
researchers to study how the diffusion of
information and communication technology
impacts the economic growth of developed
and developing countries. In the literature

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Berliyani et al / The Influence of Digital Technology ...

(Yousefi, 2011), it has been found that
information and communication technology
(ICT) plays a vital role in improving economic
prosperity in both developed and developing
countries. Technological progress drives
economic growth by increasing demand for
advanced products such as software,
communications equipment, and computers
and increasing productivity and investment in
information and communications technology.
Foreign Direct Investment
Investment is "expenditure for the acquisition
of capital goods and production equipment,
which aims to replace and especially
complement the economy's capital goods,
which will be used in the production of capital
goods and production services" in economic
theory. Webster (1999) said capital
investment is used to get results and added
value.
Budiono (2000) explains investment as costs
incurred by the industrial (private) sector to
purchase goods and services, increase stock of
used goods, or increase factory capacity.
Dornbusch and Fischer say that investment is
the demand for goods and services to increase
production capacity or income in the future.
According to Todaro (2006), one of the general
conditions for developing a country's economy
is capital accumulation, which includes land,
physical equipment, new human resources,
and population growth through increased
labor and skills—subsequent technological
advances. Capital accumulation is successful
when some or all of the disposable income is
saved and invested in better products
(production) and future income.
According to the endogenous growth model,
the return on invested capital is proportional
to the country's GDP. Investments in private
and government capital and human resources
are thought to increase productivity, offset
scientific trends that reduce production, and
create externalities or positive externalities.
Although technology is recognized as having a
significant role, it is not necessarily the
primary focus when endogenous growth
models explain the process.

REVENUE JOURNAL: MANAGEMENT AND ENTREPRENEURSHIP 2(2): 2 9 - 3 5

Economic Growth
Kuznet (1973) describes a country's economic
growth as an increase in the population's
capacity to provide various economic goods in
the long term. This increase in power is very
dependent on technological advances,
organizational changes, and ideologies
adapted to circumstances. An increase in the
economy's ability to produce goods and
services is called economic growth, according
to Muana Nanga (Muana Nanga, 2005). In
other words, quantitative changes are
produced by economic growth, which is
usually measured by GDP or industrial income
per capita.
The previous definition has three components:
the production process per person. The
economy is not a complete picture of economic
development or change at a specific time;
economic growth is a "process". Economic
growth is an increase in per capita or total
output divided by population. Therefore, the
only way to analyze production growth per
population is to analyze total production on
the one hand and population on the other.
Unlike economic growth, economic growth is a
long-term forecast in which output per capita
increases for one to two years before falling.
There is no need for a long-term process to
increase per capita production.
Average Years of Schooling
The highest level of education people in an
area can achieve is shown by the average
length of education. Higher levels indicate the
level of training completed. A common
hypothesis is that how a person thinks and
behaves is proportional to their level of
education. According to Tobing (Atmanti,
2005), people with a higher level of education,
which is calculated based on years of
schooling, have better jobs and wages than
people with a lower level of education.
According to UNDP standards, the average
number of years of education is spent by
people aged fifteen years and over who receive
various types of education. The upper limit is
fifteen years, and the lower is one year. The
maximum age of fifteen indicates that the
highest level of education is equivalent to
upper secondary education (SMA).
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3. RESEARCH METHODOLOGY
This research uses quantitative methods, time
series data relapse investigations, supporting
data from the Ministry of Energy and Mineral
Resources (MEMR) 1990-2021, Central
Bureau of Statistics (BPS) data, and World
Development Indicator data. This exploratory
study includes an evaluation of the
significance of the independent variables
(Electricity
Consumption,
FDI,
Unemployment) on economic growth as the
dependent variable using T-statistics and
probability measures. The significance level
ascertains the bond's strength and linkage
between the dependent aspects and variables.
The panel regression analysis method is used
in this quantitative research. Secondary data
from this research was obtained from the
World Bank and UNDP websites. This research
used a purposive sampling technique to
consider several factors (Sugiyono, 2011). The
sampling criteria are ASEAN member
countries and countries that present data
based on research variables for 2014–2020.

above. After data collection, classic hypothesis
testing ensures that the data is unbiased and
consistent. Next, Eviews 12 Econometrics tests
the hypothesis with simultaneous partial
statistics and coefficient of determination. A
tool: In this research, all independent variables
are used in percentage units; the logarithmic
transformation of GDP per person is the
dependent variable. Therefore, the equation
model used for this research is:
PE it = α + β 1 IUI it + β 2 FDI it + β 3 MYS it + ε i
PE it : Economic Growth (constant GDP 2015)
α : Constant
IUI : Individual Internet User
FDI : Foreign Direct Investment
MYS : Average Years of Schooling
ε i : Error term

4. RESULT AND DISCUSSION
Effect model regression results still show that
variable individual user internet use (IUI) and
foreign direct investment (FDI) with a mark
probability not enough than 5% impact the
economy
positively
and
significantly.
However, the average year of study (MYS) did
not significantly impact.

Each ASEAN member country was used as a
sample for this research based on the criteria
Table 1 : Estimated Data
Variables
C
IUI
FDI
MYS
R2
Adj R2
F- statistics
Prob (F- statistic)
Prob. Test Chow
Prob. Haussman test

Coefficient
2.343.600
0.228078
0.008379
0.692048
0.998849
0.998594

Std. Error
1.023.760
0.053240
0.004752
0.551382

t-Statistics
2.289.208
4.283.977
1.763.153
1.255.116

Prob.
0.0000
0.0001
0.0847
0.2159

3.906.703
0.000000
0.0000
0.0193

The Influence of Individual Internet Users
on Economic Growth
The results of t-statistical testing using panel
data regression show that the probability
value of the internet user variable is 0.001.
This value is lower than the significant
probability value, namely 0.05. Therefore, it
can be concluded that the social variable of
using the Internet significantly influences the
economy. The estimation results show that the
coefficient of the internet user variable is
positive with a value of 0.001, which indicates

that this variable has a significant influence on
the economy, with the assumption that an
increase in the number of internet users by 1%
will increase the economic variable by 0.001.
This follows research conducted by Amrina et
al. (2022) on the influence of information and
communication technology (ICT) on internet
users' projection in East Java Province. In
other words, the more internet users there are
in East Java Province, the greater the economic
growth. Apart from that, observations from
Parwanto et al. (2020) show that Indonesia's

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Berliyani et al / The Influence of Digital Technology ...

economic growth is directly linked to the
number of internet users. The regression
results show that every increase in Internet
users contributes to an increase in the
economy.
According to other research (Habibi &
Zabardast, 2020), internet users and mobile
phone subscriptions have significant positive
coefficients. Using OLS fixed effects and GMM
methods, this research investigates the
influence of information technology and
education on economic growth in 24 member
countries of the Organization for Economic
Cooperation (OECD) and 10 Middle Eastern
countries. Based on statistical analysis, it was
found that ICT has a more positive effect on
economic growth in countries with better
education. These results suggest that greater
access to education is necessary to generate
economic value from the internet.
The Effect of Foreign Direct Investment on
Economic Growth
The results of the t-statistical test with panel
data regression show that the probability
value of the foreign investment variable is
0.0847, significant at the 10% level. Therefore,
it can be concluded that the foreign investment
variable positively and significantly influences
the economy, assuming that an increase in
foreign investment by 1% will increase
economic variables by 0.0847%. As mentioned
above, the economies of eight ASEAN countries
were affected by foreign investment.
In addition, it has been found in research
(Kambono et al., 2020; Yuniasih & Aisyah Fitri,
2014; Nawaa et al., 2023) that the foreign
investment variable has a significance value of
less than 0.05, which indicates that H0 is
rejected, which indicates that foreign
investment has a significant positive impact on
economic growth. Another study (Su & Liu,
2016) examined how FDI and human capital
influenced economic growth in 1991–2010.
The research results show that human capital
and direct investment significantly contribute
to economic growth and that human capital
helps spread technology shaped by direct
investment.

REVENUE JOURNAL: MANAGEMENT AND ENTREPRENEURSHIP 2(2): 2 9 - 3 5

The Effect of Average Years of Schooling on
Economic Growth
The results of t-statistical testing using panel
data regression show that the probability
value of the internet user variable is 0.2159.
This value exceeds the significant probability
value at 5% or 0.05. Therefore, it can be
concluded that the Average Years of Schooling
variable does not significantly influence the
economy. Research-based on the results of
data analysis (Putri et al., 2016) and Widayati
et al., 2019) found that education level did not
significantly impact the economic growth of
Surabaya between 2003 and 2012. This
research shows that the education level did
not significantly impact the economic growth
of the city of Surabaya in a short period.

5. CONCLUSION AND SUGGESTION
This research shows that the internet is a
factor that indicates the condition of a
country's digital technology; in this study, it is
calculated as the percentage of people using
the internet to the country's population.
Between 2014 and 2020, the Internet
influenced the economic growth of eight
ASEAN countries. Furthermore, as a
macroeconomic variable, foreign direct
investment describes the flow of investment to
these countries and impacts each country's
economic growth from 2014 to 2020. In
addition, the average length of schooling is a
variable from the Human Development Index,
which shows the condition of the source of
human power.
Based on the research findings, several key
recommendations emerged. First, increasing
internet access is very important because the
internet plays a significant role in advancing
digital technology, which can encourage
economic growth in ASEAN countries. Efforts
to expand internet access must be a priority.
Second, foreign direct investment (FDI)
significantly impacts economic growth, so
ASEAN countries must create an attractive
business environment for foreign investors to
increase investment flows and economic
development.
In addition, although the average number of
years of schooling did not significantly impact
economic growth in this study, education is
33

still essential for improving the quality of
human resources. Therefore, ASEAN countries
must continue improving access and education
quality to encourage human development and
long-term economic growth. Furthermore,
regional collaboration and integration in
improving internet access, increasing FDI, and
strengthening education systems are essential
for sustainable economic growth. Finally,
further research is needed to understand
better the relationship between internet use,
FDI, education, and economic growth to help
design more effective economic and social
development policies in ASEAN.

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