The Role of Digitalization Through Internet Access in Strenghening the Economy in Sumtera Utara
DOI:
https://doi.org/10.37676/jmea.v5i4.1883Keywords:
Digitalization, Internet Access Users, Investment, Human Development Index, Labor Force Participation Rate, Gross Regional Domestic Product, Vector AutoregressionAbstract
This study aims to analyze the role of digitalization through internet access in strengthening the economy in North Sumatra Province using panel data for the period 2010–2024 with the Vector Autoregression (VAR) method. The variables used include the Human Development Index (HDI), Investment (INV), Internet Access Users (IAU), Labor Force Participation Rate (LFPR), and Gross Regional Domestic Product (GRDP). The results show that in the short term each variable is still dominated by its own influence, while in the medium and long term, investment is the most dominant factor in influencing all research variables. Impulse Response Function (IRF) analysis shows that investment and HDI provide consistent and strong positive influence on GRDP growth from the short to long term. Conversely, internet access tends to have a negative impact in the medium and long term if not balanced by improving human resources quality and productive technology utilization. Forecast Error Variance Decomposition (FEVD) results confirm the dominance of investment as the largest contributor of variation (±60%) to GRDP in the long run, followed by HDI (±20%). Thus, North Sumatra's economic strengthening is more determined by investment and human development, while digitalization needs to be supported by strengthened digital literacy and equitable technology infrastructure to drive sustainable economic growth (Faried & Nasution, 2025; Annisa Ilmi et al., 2019)
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Copyright (c) 2026 Yunita Fitriana, Annisa Ilmi Faried, Andrian Zulfa, Rahmad Sembiring
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