The Impact of Digitalization, Inflation and Investment on Economic Growth

Abstract

Purpose —Not only in terms of inflation and investment which influence economic growth, but in the current 5.0 era, the digitalization of mobile phone use is a new breakthrough that needs to be seen how it affects economic growth. This research aims to analyze the influence of digitalization, inflation and investment on economic growth in the central region of Indonesia.

Method — The data used is panel data, 13 provinces in the central region of Indonesia, namely West Nusa Tenggara, East Nusa Tenggara, West Kalimantan, Central Kalimantan, South Kalimantan, East Kalimantan, North Kalimantan, North Sulawesi, Central Sulawesi, South Sulawesi, Southeast Sulawesi, Gorontalo and West Sulawesi in 2019-2021 using the Multiple Linear Regression Analysis method.

Result — The results obtained through Fixed Effect Model estimation show that digitalization as measured by the proportion of mobile phone users has a significant positive influence on economic growth, inflation has a significant negative influence on economic growth, and investment has an insignificant positive influence on economic growth. As we know, provinces in the central region of Indonesia require updates in terms of digitalization to keep up with developments towards the 5.0 era. Based on the results obtained, it is hoped that the digitization of mobile phone use can be increased so that economic growth experiences a positive increase and the government needs to pay attention to the inflation rate to maintain stable economic growth in the central region of Indonesia.