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Does Digital Literacy Mediate the Relationship bBetween ICT and Regional Own-Source Revenue?

Author

Listed:
  • Priambodo Aji

    (Jenderal Soedirman University, Faculty of Economics and Business, Department of Economics, Indonesia)

  • Anwar Nurul

    (Jenderal Soedirman University, Faculty of Economics and Business, Department of Economics, Indonesia)

  • Suharno

    (Jenderal Soedirman University, Faculty of Economics and Business, Department of Economics, Indonesia)

Abstract

This study examines the mediating role of digital literacy in the relationship between ICT development and regional own-source revenue across Indonesia’s 34 provinces from 2018 to 2022. The research addresses a critical gap in understanding how digital competencies influence the effectiveness of ICT investments in generating regional revenue. Using structural equation modeling and panel data analysis, the research investigates how three ICT components (infrastructure, usage, and skills) influence digital literacy and regional revenue generation. The study employs comprehensive data from Indonesia’s Central Bureau of Statistics (BPS) and the Ministry of Communication and Information Technology of Indonesia, analyzing both direct effects and mediation pathways. The findings reveal several key insights: First, ICT infrastructure shows an unexpected negative correlation with digital literacy, challenging assumptions about infrastructure investment. Second, both ICT usage and skills demonstrate significant positive effects on digital literacy development. Third, digital literacy positively influences regional own-source revenue. Fourth, digital literacy significantly mediates the relationships between all ICT components and regional revenue, with the strongest mediation effect found in ICT infrastructure. These results suggest that policymakers should adopt an integrated approach combining infrastructure development with programs to enhance ICT usage and skills while prioritizing digital literacy education. The findings contribute to understanding digital transformation’s role in regional economic development and provide evidence-based guidance for bridging the digital divide in developing economies, particularly in the context of Indonesia’s diverse geographical and socioeconomic landscape.

Suggested Citation

  • Priambodo Aji & Anwar Nurul & Suharno, 2025. "Does Digital Literacy Mediate the Relationship bBetween ICT and Regional Own-Source Revenue?," Economics, Sciendo, vol. 13(2), pages 203-222.
    • Handle: RePEc:vrs:econom:v:13:y:2025:i:2:p:203-222:n:1010
    DOI: 10.2478/eoik-2025-0037
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    More about this item

    Keywords

    Access and ICT Infrastructure; ICT Usage; ICT Skills; Digital Literacy; Regional Own-Source Revenue;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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