The impact of Mobile Telecommunication on Regional Economic Growth and Employment: Empirical Evidence from 34 Provinces of Indonesia

Abstraksi

This study is exploring the effect of ICT in the form of mobile telecommunication on economic growth and employment in 34 provinces of Indonesia for period 2010-2016. The ICT is substantial for Indonesia development and has a significant impact on the economy with 10% average growth, surpassing national GDP growth. The importance of ICT has encouraged enormous research in the world, unfortunately emerging economy such as Indonesia has less attention. Moreover, geographical diversity in Indonesia has affected imbalance development including ICT services and combined with different economic activity between regions expected to have a different impact on the economy. To measure the effect of mobile on growth and employment in provincial level, we employ augmented production function and run panel estimation using Ordinary Least Square. The data for 34 provinces sourced from an official entity such as BPS, BKPM, and industry. The result shows mobile adoption in Indonesia has reached 386 million number by 2016, while 4G services rolled out in 2014. Moreover, 95% Indonesian prefer prepaid services with ARPU around USD 2.67. The mobile also has contributed to GDP per capita by USD 16.25 for 1% penetration or USD 947.38 as adoption reach 58.3% of the population. Furthermore, with 124.54 million working population by May 2017, mobile adoption has contributed to 4.45 million-job creation, as every 1% of penetration will increase 0.061% employment. The result beneficial for the government in policy development as well as industries on business operation and contribute to the literature on ICT research