The Impact of business service in information and communication technologies industry on economic growth of Indonesia

Abstract

The main purpose of this study is to perform in-depth analysis associated with the role of business services in ICT industry in Indonesia. In addition, it is also important to conduct further research by filling the gap from the previous study (Zuhdi 2014b), such as conduct inter-country comparison between Indonesia and developed countries as compared countries, i.e. Korea, the United States, France, the United Kingdom, Denmark and the Netherlands. For this purpose, the researcher will adopt a quantitative methodology by using the input-output table in each country over the time period examined (1995, 2000, 2005 and 2011). In addition, the value-added multiplier approach will also be used to estimate the economic impact and also to identify its correlation with share of business service in the ICT industry in each sample country. The findings indicate that the contribution of ICT services to Indonesia economy has increased during 2000-2011. The increase in the value of VAM in ICT products mainly was driven by the increase in the share of total value-added and total intermediate input on average of the ICT industry in Indonesia. Moreover, ICT services (post and telecommunications and computer and related activities) are the larger contributor to the value of VAM in ICT products than manufactured ICT goods. This study also indicates the level of labor productivity in ICT industry has recorded a remarkable increase during 2005-2011. It illustrates that the gap in labor productivity between Indonesia and other sample countries become smaller over time.