IDEAS home Printed from https://ideas.repec.org/p/idn/wpaper/wp032025.html

Optimizing Indonesia'S Digitally-Enabled Services For Economic Growth And Improved Trade Balance

Author

Listed:
  • Danny Hermawan

    (Bank Indonesia)

  • Cicilia A. Harun

    (Bank Indonesia)

  • Ade Dwi Aryani

    (Bank Indonesia)

  • Dwi Cahyo Ardianto

    (Bank Indonesia)

  • Eskanto Adi Nugroho

    (Bank Indonesia)

  • Andi Widianto

    (Bank Indonesia)

  • Najibullah Ulul Albab

    (Bank Indonesia)

Abstract

This study examines how digital trade in services (DTS) can promote economic growth and improve Indonesia's digital trade balance. Over the past two decades, digital transformation has reshaped global trade, but developing economies such as Indonesia face a dual reality of opportunities and infrastructure constraints. Despite sectoral growth, Indonesia recorded a USD 18.4 billion deficit in DTS in 2024, driven primarily by imports of telecommunications, professional services, and digital content. This trade imbalance underscores the need to optimize Indonesia's digital services exports and reduce dependence on foreign digital products. Using a mixedmethods approach that combines cross-country panel GMM and time-series GMM for Indonesia, the study finds that regulations, digital talent, and digital infrastructure are critical to accelerating economic growth and enhancing the competitiveness of digital service exports. However, strict regulations can hinder exports, particularly in developing countries that face challenges in regulatory and infrastructure capacity. In Indonesia, while improved regulations can support economic growth and reduce the DTS deficit, further development of digital talent and infrastructure is essential to driving growth. The study recommends focusing on developing digital talent, strengthening regulations, and expanding digital infrastructure. These efforts will reduce the DTS deficit and position Indonesia as a competitive player in the global digital economy.

Suggested Citation

  • Danny Hermawan & Cicilia A. Harun & Ade Dwi Aryani & Dwi Cahyo Ardianto & Eskanto Adi Nugroho & Andi Widianto & Najibullah Ulul Albab, 2025. "Optimizing Indonesia'S Digitally-Enabled Services For Economic Growth And Improved Trade Balance," Working Papers WP/03/2025, Bank Indonesia.
    • Handle: RePEc:idn:wpaper:wp032025
    as

    Download full text from publisher

    File URL: https://publication-bi.org/repec/idn/wpaper/WP032025.pdf
    File Function: First version, 2025
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ndubuisi, Gideon & Otioma, Chuks & Tetteh, Godsway Korku, 2021. "Digital infrastructure and employment in services: Evidence from Sub-Saharan African countries," Telecommunications Policy, Elsevier, vol. 45(8).
    2. Zoltan J. Acs & Abraham K. Song & László Szerb & David B. Audretsch & Éva Komlósi, 2021. "The evolution of the global digital platform economy: 1971–2021," Small Business Economics, Springer, vol. 57(4), pages 1629-1659, December.
    3. Suresh Sood & Hugh Pattinson, 2020. "Globotics Driven Digital Transformation: A Bright Future for Internships, Digital Marketing and E-Commerce Education," International Journal of Management Science and Business Administration, Inovatus Services Ltd., vol. 6(3), pages 20-28, March.
    4. Xiaomei Wang & Jia Zhang & Yixin Zhu, 2024. "Barriers to Digital Services Trade and Export Efficiency of Digital Services," Sustainability, MDPI, vol. 16(17), pages 1-14, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Godsway Korku Tetteh & Chuks Otioma, 2025. "Cyberattack, cyber risk mitigation capabilities, and firm productivity in Kenya," Small Business Economics, Springer, vol. 64(3), pages 1493-1514, March.
    2. Afolabi, Joshua Adeyemi, 2023. "Advancing digital economy in Africa: The role of critical enablers," Technology in Society, Elsevier, vol. 75(C).
    3. Njangang, Henri & Beleck, Alim & Tadadjeu, Sosson & Kamguia, Brice, 2022. "Do ICTs drive wealth inequality? Evidence from a dynamic panel analysis," Telecommunications Policy, Elsevier, vol. 46(2).
    4. Yating Li & Martin Kenney & Donald Patton & Abraham Song, 2023. "Entrepreneurial ecosystems and industry knowledge: does the winning region take all?," Small Business Economics, Springer, vol. 61(1), pages 153-172, June.
    5. Stefan Apostol, 2023. "Digitalization and Platformization in Romania Based on the Digital Platform Economy Index 2020," Central European Business Review, Prague University of Economics and Business, vol. 2023(4), pages 77-103.
    6. Saige Wang & Chenchen Zhai & Yunxiao Zhang, 2024. "Evaluating the Impact of Urban Digital Infrastructure on Land Use Efficiency Based on 279 Cities in China," Land, MDPI, vol. 13(4), pages 1-24, March.
    7. Komlósi, Éva & Madár, Miklós, 2024. "Digitális vállalkozási ökoszisztémák a Kárpát-Balkán térségben [Digital entrepreneurship ecosystems in the Carpathian-Balkan region]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1254-1279.
    8. Maksim Belitski & Christina Guenther & Alexander S. Kritikos & Roy Thurik, 2022. "Economic effects of the COVID-19 pandemic on entrepreneurship and small businesses," Small Business Economics, Springer, vol. 58(2), pages 593-609, February.
    9. Francesco Fasano & Tiziana Rocca, 2024. "Does the bank-firm human relationship still matter for SMEs? The game-changing role of digitalization," Small Business Economics, Springer, vol. 62(1), pages 159-178, January.
    10. Di Wang & Wei Dou & Jiajun Ning, 2025. "Can new infrastructure construction facilitate low-carbon energy transition? A quasi-natural experiment based on China’s smart city pilots," Economic Change and Restructuring, Springer, vol. 58(2), pages 1-35, April.
    11. Liang, Min & Chen, Hongmei, 2025. "Digital economy development, regional openness, and high-quality foreign trade," Finance Research Letters, Elsevier, vol. 81(C).
    12. Xiaole Deng & Fang Zhang & Shuyi Lin & Wei Qiu, 2024. "Research on the Structural Characteristics and Influencing Factors of Digital Service Trade Networks in RCEP Member States," Sustainability, MDPI, vol. 16(23), pages 1-22, December.
    13. Weilong Wang & Jianlong Wang & Haitao Wu, 2025. "Assessing the Impact of New Digital Infrastructure on Enterprise Green Transformation from a Triple Performance Perspective," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(1), pages 5594-5633, March.
    14. Afolabi, Joshua Adeyemi & Fatai, Basiru Oyeniran, 2026. "Unlocking trade locks in landlocked developing countries (LLDCs) in Africa: The role of digital infrastructure," Telecommunications Policy, Elsevier, vol. 50(1).
    15. Dieter Bögenhold & Alina Sawy, 2024. "Competing strategies between public and private self: separation and diffusion of the entrepreneurial identity of solo entrepreneurs on social media," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 14(1), pages 1-16, December.
    16. Haili Xia & Yue Tang, 2025. "Does digital economy affect the quantity and efficiency of carbon emissions: evidence from dynamic spatial Durbin model analysis," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(10), pages 23997-24017, October.
    17. Haihong GUO & Yuqin ZHU, 2026. "“Digital” and low carbon: digital rural development pilot policies and agricultural carbon productivity," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 14(1), pages 1-25, December.
    18. Zhang, Zhi & Meng, Qingkun & Wang, Jun & Wu, Ying, 2025. "Digital economy, customer stability, and organizational resilience," Finance Research Letters, Elsevier, vol. 72(C).
    19. Adugna, Hailu, 2024. "Fintech dividend: How would digital financial services impact income inequality across countries?," Technology in Society, Elsevier, vol. 77(C).
    20. Simplice Asongu & Nicholas M. Odhiambo, 2024. "The role of foreign aid in the nexus between capital flight and unemployment in sub-Saharan Africa," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 52(1), pages 1-15, April.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:idn:wpaper:wp032025. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Shinta Fitrianti or Jimmy Kathon (email available below). General contact details of provider: https://edirc.repec.org/data/bigovid.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.