The influence of the digital economy on growth and its impact on unemployment rates: Indonesia and Thailand

Abstract

Background: ASEAN makes a large and important contribution to the world economy. This can be seen from its contribution, which reached US$1.73 trillion to the world economy in 2021. Indonesia is slightly behind Thailand in terms of welfare and growth, but still has great potential to catch up with Thailand. This research aims to prove the model used by Sahoo et al (2021), regarding the digital economy that affects economic growth and its impact on the unemployment rate. Methods: This research uses 2 different models in its elaboration, along with 2 different methods in its calculations. For the first model, the calculation is done using the 2SLS (two-stage least squares) method, and the second model uses the OLS (ordinary least squares) method.. Findings: EYS (Expected Years of Schooling) indicates that in both countries, the quality of education is still low and there is a skill mismatch for industry needs. However, for Dc*EYS, it actually shows that, especially for Indonesia, education has sufficiently met the standard needs of the industrial world, which can be seen from the significant and positive value. Likewise, for CPI (Consumer Price Index), although it has a significant value, its direction is negative. This indicates that in Indonesia and Thailand, inflation has increased quite high. However, for Dc*CPI, specifically for Indonesia, CPI actually has a significant and positive value, which means that inflation is quite measured and does not even affect people's purchasing power. Conclusion: This research proves that the model used by Sahoo et al (2021) is very good at defining the influence of digital economic variables on economic growth in Indonesia and Thailand, both simultaneously and partially. And this has an impact on the unemployment rate in Indonesia and Thailand. Novelty/Originality of this article: This study extends the existing digital economy–economic growth framework to Indonesia and Thailand, two emerging ASEAN economies with distinct levels of digital development and economic characteristics.