Macroeconomic Growth in Indonesia under the Fourth Industrial Revolution: Insights from VAR and VD
DOI:
https://doi.org/10.5281/zenodo.21261238Keywords:
Industry 4.0, ICT investment, Foreign direct investment, VAR econometric analysis, Economic growth.Abstract
This study investigates the impact of the Fourth Industrial Revolution on Indonesia’s macroeconomic growth, with a focus on ICT investment and foreign direct investment (FDI) as structural drivers. The objective is to examine how digital transformation and capital inflows interact with GDP growth, inflation, monetary policy, and government expenditure. Using annual data from 2000 to 2024, the research applies a Vector Autoregression (VAR) framework, supported by impulse response functions (IRF) and variance decomposition (VD), to capture both short‑run fluctuations and long‑run equilibrium dynamics. The results show that ICT investment exerts a reinforcing long‑term effect on GDP, while FDI provides immediate short‑run stimulus and corrective adjustments. Inflation and the BI7DRR policy rate act as stabilizing mechanisms, and fiscal spending on digital infrastructure strengthens ICT adoption. These findings underscore the significance of coordinated fiscal–monetary strategies and innovation‑driven policies, offering actionable insights for sustaining resilience and competitiveness in Indonesia’s Industry 4.0 trajectory.
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