Utilization of Indonesia’s Digital Economy to Invest in Human Capital and Provide Socio-Economic Support to Stimulate Economic Growth

Abstract

An increase in current investment in the digital economy of Indonesia is needed to leverage the potential of human capital more effectively for the country to experience healthier economic growth. An analysis of Indonesia's socio-economic situation in 2020 is conducted by analyzing trends in the population's economic abilities, digital data connectivity, and education levels, then comparing the utilization of these resources to population case studies, social and economic theories, and documented research of government and private organizations. Based on previous economic studies, human capital investment parameters were chosen that revealed that investing in the human capital of a country's population promotes economic growth through economic empowerment, education, and technological advancement. This paper samples statistics from 2017 up to the first quarter of 2020 of the digital economy and labour market. In addition, this paper provides some review of the socio-economic impact of the COVID-19 pandemic related to investing in human capital to stimulate economic growth. Most of the statistics used in this study are sourced from federal agencies, and some are sourced from private organizations. Comparative analysis of the statistics reveals that services from the digital economy provide virtual presence; social connectivity; and data availability, access, and utilization. Also, the country's human capital financing endeavours through Peer to Peer (P2P) lending and investing in human capital education is important to stimulate economic growth. Furthermore, productivity gains in business operations can increase across Indonesia's industries if workers' skillset in the labour market can be advanced through accessible training, such as online learning and certification platforms. The current study contributes to the literature by shedding light on the need for human capital investment.

Can the Digital Economy Outperform the Oil Economy in Terms of Achieving Human Development?

“…This may be explained by the shift in the structure of jobs and wages resulting from digital transformation, in line with Lee and Clarke [32] and Ogli and Ogli [31]. These results proved that the digital economy had a direct impact on the education index in the long term, as stated in Rahman [19]. This means that the digital economy, in the long term, can avoid some of its negative effects on human development through its contribution to developing education and expanding educational sources to better qualify them to deal with new technologies and face new challenges.…”

“…Moreover, they can enhance workers' skills in the labor market through training, learning platforms, and online certification. Rahman [19] highlights this in his study on leveraging the Indonesian digital economy to invest in human capital, provide social and economic support, and, thus, stimulate the economy. He notes that there is a need to increase the current investment in Indonesia's digital economy to leverage human capital's potential more effectively for the sake of healthier economic growth.…”

Untitled

“…Human capital utility in an economy is commonly regarded as one of the most valuable determinants of economic health. Many people believe that technological literacy has a direct impact on the development of human capital drivers such as financial ability, educational levels, and health (Rahman, 2021).…”