Web Economy: Navigating Internet Influence, Foreign Investment, Consumption and Economic Growth in the Connected Age

English

Abstract

This study will analyze and examine the link between technological developments and
investment in the dynamics of economic growth in Indonesia. Data is sourced from the World
Bank with a measurable range of 2000-2020. The variables we use are internet users,
consumption, foreign direct investment, and economic growth which are analyzed using
Vector Autoregressive (VAR). Our main findings include the mutual influence of prior
Internet use (IU) and consumption (CO) suggesting that past increases in Internet activity
can shape consumption patterns that are reflected in the current period. In addition, the
unidirectional relationship between foreign direct investment (FDI) in the past and economic
growth (ECG) provides evidence of the impact of foreign investment on current economic
developments. The strong influence of internet use in the previous period and economic
growth (ECG) also gave confidence in the important role of the internet in shaping economic
dynamics. Taken together, these results confirm that in an increasingly connected economic
framework, these variables work together in complex ways to form the foundation for strong
and sustainable growth.