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Digitalization’s Impact on Micro-Firm Performance and Worker Welfare in Sumatra Anggara, Rizki Tri; Alfahma, Elsya Gumayanti
Journal of Developing Economies Vol. 10 No. 2 (2025)
Publisher : Universitas Airlangga

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20473/jde.v10i2.64187

Objective: This study aims to analyze digitalization’s impact on micro-firm performance and workers’ welfare in Sumatra’s manufacturing sector.Methods: Employing a Propensity Score Matching (PSM) method, this research compares firms and workers who have adopted digital technologies with a control group.Findings: The findings reveal that digitalization significantly enhances firm income and provides workers with opportunities for higher earnings and extended working hours. However, the findings also show that digitalization did not enhance business stability during the COVID-19 pandemic. These insights highlight the transformative potential of digital technologies in driving economic growth and improving livelihoods while also uncovering critical gaps that must be addressed.Value: This study underscores the need for targeted policies to promote equitable digital adoption, expand digital infrastructure, and provide workforce training programs. By addressing these challenges, digitalization can bridge regional and socio-economic divides, ensuring its benefits reach smaller firms and marginalized workers. Policy implication: The findings contribute valuable insights for policymakers to develop strategies that strengthen the resilience, competitiveness, and inclusivity of Sumatra’s micro-manufacturing sector, fostering a more sustainable and equitable economic landscape in the region.

Impact of Asian Financial Stress on Indonesian Bank Credit Growth Saputra, Sahdan; Ihyani, Layali
Journal of Developing Economies Vol. 10 No. 2 (2025)
Publisher : Universitas Airlangga

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20473/jde.v10i2.65458

Objective: This study aims to analyze the influence of the Financial Stress Index from Asian countries with high economic connectivity on the growth of bank credit in Indonesia, such as Singapore, China, Hong Kong, Japan, and Malaysia.Methods: Using time series data from the growth of general bank credit in Indonesia and the Financial Stress Index (FSI) from each country from January 2011 to August 2023, the total number of observations (N) in this study is 152. Therefore, this study uses the multiple linear regression method with the Ordinary Least Squares (OLS) approach. Findings: The findings reveal that the Financial Stress Index (FSI) from economically connected Asian countries does not significantly influence Indonesia’s bank credit growth. In contrast, domestic FSI shows a negative and significant effect, indicating that internal financial stress directly slows credit expansion and increases overall credit risk. The results also show that banks with larger asset sizes experience a greater reduction in credit growth, consistent with the negative impact of the SIZE variable. Additionally, higher operational costs (BOPO) further hinder credit growth, while increases in third-party funds (TPF) significantly enhance credit expansion and support lending capacity.Originality/Value: This study offers new evidence by showing that external financial stress from major Asian partners does not affect Indonesia’s credit growth, while domestic stress plays a decisive role. These findings expand the literature on financial spillovers by revealing Indonesia’s unique resilience compared to other emerging markets.Practical/Policy implication: These findings suggest that bank management should anticipate the Financial Stress Index (FSI) stemming from domestic sources by diversifying their credit portfolios. Meanwhile, regulators can formulate policies to mitigate the impact of external financial stress, such as macroprudential policies and regulations that encourage banks to increase their capital adequacy ratio during periods of economic stress.

Can Public Health Spending Mitigate the Impact of CO2 Emissions on Child Mortality in Sub-Saharan Africa SSA? Iliyasu, Ibrahim; Lawal Gambo, Suleman; Sabitu, Abubakar
Journal of Developing Economies Vol. 10 No. 2 (2025)
Publisher : Universitas Airlangga

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20473/jde.v10i2.68955

Objective: This study aligns with the actualisation of SDGs targets 3.2, 11.6, 13.3 and 17.1 in Sub-Saharan Africa and contributes to the contemporary discourse on health-environment-public policy dynamics. Specifically, it examines the individual and interactive effect of carbon dioxide emission and per capita public health spending on child mortality.Methods: Data on 44 SSA countries over the years 2000-2020 was analysed using a set of Panel estimation techniques (pool OLS, FE and 2-step difference GMM)Findings: The findings suggested that CO2 emissions have significant increasing impact on “infant and under-five mortality rates”; while, higher per capita public health spending decrease the level of infant and under-five mortality rates. The interaction term indicates that per capita public health spending can dampen the adverse impact of C02 emissions on infant and under-five mortality rates.Originality/Value: evidence suggested that increase in per capita public health spending amid rising CO2emissions works to neutralise the adverse impact of CO2 emissions on “infant and under-five mortality rates. Thus, the study contributes to integrating health-environment-public policy literaturePractical/Policy implication: The study provides insight for the imperative of achieving global CO2 emissions reduction target and increasing average per capita public health spending in SSA.

Debt And Happiness: A Generalized Order Logit Analysis Purwanto, Edy; Purwono, Rudi; Sukartini, Ni Made
Journal of Developing Economies Vol. 10 No. 2 (2025)
Publisher : Universitas Airlangga

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20473/jde.v10i2.70785

Objective: Financial literacy can influence borrowing attitudes and behaviors. Low financial literacy among Indonesians may impair debt manageability and lead to psychological distress. This empirical research aimed to analyze the effects of debt on happiness in Indonesia.Methods: This study used cross-sectional data from the 2007 Indonesia Family Life Survey (IFLS). Happiness was measured on a four-point ordinal scale, namely very unhappy (1), unhappy (2), happy (3), and very happy (4). Given the nature of the dependent variable, a generalized ordered logit model was applied to estimate the relationship between debt and happiness. This approach is well-suited to address the study objective by capturing varying effects across different levels of happiness. Findings: Results showed a significant negative relationship between debt and happiness (coefficient = -0.145, p < 0.01). The marginal effect indicated that debt reduced the likelihood of being happy and very happy by -0.20% and -0.83%, respectively. Depression had the strongest negative impact (-5.67%), while marriage (4.03%), household economic adequacy (3.40%), health care (2.31%), and physical health (1.99%) were the positive contributors. Originality/Value: This study contributed to the limited research examining the link between debt and well-being in developing economies, focusing on Indonesia’s socioeconomic and cultural context. Practical/Policy implication: Financial literacy needs to be enhanced to improve borrowing decisions and debt management among Indonesians. Strengthening financial education programs and regulating non-formal lenders are essential to prevent exploitative lending practices. Moreover, integrating debt awareness into mental health programs and disseminating information through mass and social media can help mitigate the psychological impact of debt.

Determinants of Economic Growth in 8 ASEAN Countries 2008-2022 Yahya, Padli Pawaid; Wau, Taosige; Badriati , Baiq El
Journal of Developing Economies Vol. 10 No. 2 (2025)
Publisher : Universitas Airlangga

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20473/jde.v10i2.73069

Objective: This research aims to further examine the influence of investment, corruption, inflation, labor, and trade openness, and it can be seen that these are the determinants of economic growth through several of these variables in the ASEAN region countries for the 2008-2022 period.Methods: Panel data regression is analyzed using three approaches: the Common Effect Model (CEM), the Fixed Effect Model (FEM), and the Random Effect Model (REM). Model selection is determined through the Chow, Hausman, and Lagrange Multiplier tests. Classical assumption tests (normality, multicollinearity, heteroscedasticity, and autocorrelation) and significance tests (F-test, t-test, and R²) are conducted using EViews 10. Findings: Summarize the key results of your analysis. Highlight the main empirical relationships, theoretical outcomes, or trends identified in the study. Focus on the economic significance of these findings, how they contribute to understanding behaviors, mechanisms, or policy effects relevant to the research question. Originality/value: So that statistical results can be found by showing various variants, especially in the variables of corruption and inflation have no effect on economic growth, while the other three variables together, investment, labor and trade openness have a positive and significant effect on economic growth. Practical/Policy implication: Outline the practical implications of your findings for economic policy, regulation, or institutional decision-making. Suggest how policymakers, economists, or public institutions might apply your results. Where applicable, indicate how your research could guide future interventions, policy design, or economic reforms.

Financial Inclusion and Income Inequality in Asia: A Quantile Panel Analysis Rosalina, Linda; Wibowo, Wisnu
Journal of Developing Economies Vol. 10 No. 2 (2025)
Publisher : Universitas Airlangga

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20473/jde.v10i2.73105

Objective: This empirical study investigates the heterogeneous impact of financial inclusion on income inequality across the economically and institutionally diverse Asian region. Specifically, it examines how the effect of financial inclusion varies across different segments (quantiles) of the inequality distribution, a dimension largely unexplored by prior research.Methods: Utilizing an annual panel dataset spanning 29 Asian countries from 2010 to 2022, the study employs the Panel Quantile Fixed Effect model. This robust econometric approach is selected to effectively control for unobserved country-specific heterogeneity and to address the non-normal, outlier-prone nature typical of income inequality data. Analysis is focused on the lower (Q10), median (Q50), and upper (Q90) quantiles.Findings: Estimation results consistently demonstrate that financial inclusion significantly reduces income inequality across all tested quantiles (Q10 ,Q50, Q90), with statistical significance maintained across the board (e.g., Q10: p=0.031, : Q90:p=0.059). The most substantial mitigating impact is identified at the median quantile (Q50), exhibiting a large negative coefficient of -4.9404 (p=0.000). This key finding suggests that FI is most effective in countries characterized by moderate levels of inequality. Among the control variables, trade openness significantly exacerbates inequality at the Q50 level, while other macroeconomic factors are generally insignificant.Originality: The primary novelty lies in the application of the Panel Quantile Fixed Effect method to a broad 29-country Asian sample to precisely capture FI’s differentiated impact. By providing nuanced, quantile-specific estimations, this research significantly advances beyond conventional mean-based studies (such as OLS and GMM), confirming that financial inclusion’s role in inequality reduction is heterogeneous and conditional on a country’s initial inequality level.Policy implication: These findings underscore the critical need for adaptive, non-uniform financial inclusion policies. Policymakers in Asia must tailor their financial inclusion strategies—including the types of services offered—based on the specific level of inequality they currently confront. This targeted approach is essential to maximizing the effectiveness of financial inclusion in promoting sustainable income equality.

Regional Inequality in Daerah Istimewa Yogyakarta Province 2014-2024: A William Index Analysis Ghomzah, Khofifah; Putri, Faza Safira Mahardika; Fauziah, Berliana Ranti Fara
Journal of Developing Economies Vol. 10 No. 2 (2025)
Publisher : Universitas Airlangga

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20473/jde.v10i2.73818

Objective: Economic growth is an important aspect that reflects the success of a country or region’s economic development. The economy of Yogyakarta Province tends to increase from 2014 to 2024 based on the increasing GRDP per capita data, but there is still a problem of inequality. Income inequality between regions can lead to development problems and economic instability. The purpose of this study is to determine the level of inequality between regencies/cities in Yogyakarta Province from 2014 to 2024. This study includes empirical studies that make important contributions by providing the latest empirical evidence on the condition of regional inequality in the Special Region of Yogyakarta and by analyzing the characteristics of economic growth in the region. Methods: The data used in this study is time series data from the Gross Regional Domestic Product per capita and Total Population of Regency/City in the Province of DIY for the period 2014-2024. To determine and analyze inequality, the Williamson Index is used.Findings: The average inequality between regions in DIY Province is 0.8296, which, according to the criteria (WI > 0.5), indicates a high level of inequality between regencies/cities. This value indicates that inequality among the regencies/cities in Yogyakarta Province is high, or economic growth between regions is uneven.Originality/Value: This study provides updated evidence for Yogyakarta’s unique context. This study offers a novel approach by extending the analysis period to 11 years, from 2014 to 2024, including the latest data.Policy Implication: Recommendations include evaluating and reformulating strategic policies for economic development based on leading sectors, prioritizing equitable infrastructure development, improving access to education and healthcare, and fostering potential sector development in underdeveloped areas to reduce regional disparities.

Impacts of Capital Formation, Labor, Human Development, and Tourism on Economic Growth in Yogyakarta Province Setiyani, Zulaekha; Panjawa, Jihad Lukis; Prakoso, Jalu Aji; Septiani, Yustirania
Journal of Developing Economies Vol. 10 No. 2 (2025)
Publisher : Universitas Airlangga

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20473/jde.v10i2.74812

Objective: This study investigates the determinants of regional economic growth in the Special Region of Yogyakarta, focusing on five districts and cities during the period 2011–2024. The research addresses the problem of persistent interdistrict disparities despite Yogyakarta’s consistently higher economic growth than the national average. The main objective is to identify the key factors influencing regional growth and to assess their relative contributions within a tourism-driven economy. This empirical research is relevant to the broader macroeconomic context of regional development and income distribution.Methods: An empirical analysis using static panel data regression with a Fixed Effect Model (FEM) is employed. The dataset covers annual observations from 2011 to 2024 for five administrative areas. Variables include Gross Fixed Capital Formation (GFCF), the Human Development Index (HDI), labor force participation, and tourism income. The FEM method effectively controls for regional and temporal heterogeneity, yielding robust estimates of growth determinants.Findings: Empirical results reveal that GFCF, HDI, and tourism income have significant, positive effects on regional economic growth, underscoring the importance of investment, human capital, and tourism as primary drivers of growth. Conversely, the labor force variable shows no statistically significant impact. These findings underscore the distinct structure of Yogyakarta’s economy, where capital formation and tourism-based income play a more dominant role than labor quantity in driving growth. Originality/Value: This study enriches existing literature by reassessing growth determinants using updated data and emphasizing Yogyakarta’s tourism-based regional economy. It fills gaps in prior studies marked by mixed findings and limited tourism-focused analyses, offering new empirical insights into the tourism growth nexus at the subnational level.Policy Implication: Findings suggest that local governments should strengthen investment, human capital, and tourism development to achieve inclusive and sustainable growth. Policy efforts focusing on infrastructure, education, and tourism promotion are essential to reducing interdistrict disparities and fostering balanced regional development.

Rising Food Inflation in Nigeria: Do Monetary Policy Interventions Matter? Nzeh, Innocent Chile
Journal of Developing Economies Vol. 10 No. 2 (2025)
Publisher : Universitas Airlangga

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20473/jde.v10i2.75884

Objective: The rising cost of food in Nigeria, especially in recent times, has increased the level of hunger and frustration among Nigerians. Consequently, several policies have been put in place to increase food productivity on the one hand and reduce the high level of food inflation on the other. This study examined the response of food inflation to the CBN’s manipulation of monetary policy tools. The novelty introduced in this study is the use of the vector autoregressive (VAR) model in the analysis of the response of food inflation to the manipulation of monetary policy tools in Nigeria. Methods: The study used monthly data that spanned the period from 2007M12-2024M5, while the VAR framework was adopted for analysisFindings: The study found that food inflation responded positively to shocks in the broad money supply (M2) across all periods, except period one. It was also found that, while food inflation responded negatively to the monetary policy rate (MPR), the Treasury bill rate (TBR), and bank reserves in the majority of periods, its response to the exchange rate was positive in all periods. In another respect, the findings indicate that the monetary authorities responded positively to shocks in food inflation by manipulating the MPR, TBR, and the exchange rate. In particular, the MPR, TBR, and exchange rate responded positively to shocks in food inflation during the study period.Originality/Value: This study contributes to extant literature through methodology. It applies the vector autoregressive (VAR) model in the analysis to take care of the possible feedback arising from the implementation of monetary policy. This approach departs from previous studies in Nigeria which adopted frameworks such as the autoregressive distributed lag (ARDL) model and the non-linear ARDL. Practical/Policy implication: Address food inflation using monetary policy tools and complementing them with fiscal policies. In addition, the exchange rate policy should be adjusted to favour food imports in the short run, while the long-run target should be to increase domestic food production through various measures.

Efficiency of Indonesian Government Education Spending: A Stochastic Frontier Analysis Approach Dwipatna, I Made Jyotisa Adi
Journal of Developing Economies Vol. 10 No. 2 (2025)
Publisher : Universitas Airlangga

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20473/jde.v10i2.77487

Objective: Education serves as a foundation of human development and a key driver of national competitiveness, with community outcomes significantly shaped by the allocation and efficiency of government education expenditure. Design/Methods/Approach: This study evaluates the effectiveness and efficiency of government education spending in relation to educational outcomes. Using panel data from 34 provinces in Indonesia for the period 2016–2023, sourced from the Indonesian Central Bureau of Statistics and the Ministry of Finance, the analysis applied the Stochastic Frontier Analysis framework with the Maximum Likelihood Estimation approach. Findings: Government spending on education positively and significantly affects educational outcomes, with an average technical efficiency score of 0.8365. Furthermore, per capita GRDP, poverty levels, and the population growth rate are also found to positively influence educational outcomes in Indonesia. Originality/Value: This study uniquely applies Stochastic Frontier Analysis to provincial-level data, filling gaps left by previous correlation-based research. Using SFA provides a deeper understanding of efficiency variations across provinces, offering insights that extend beyond simple correlations.Practical/Policy implication: The findings of this study have significant implications for Indonesian education policy. Government spending on education demonstrates a positive impact on educational outcomes, emphasizing the need for more efficient and equitable budget allocation across regions. With a technical efficiency level of 83.65 percent, there remains a 16.35 percent margin for improvement to achieve optimal resource utilization. Policymakers should strengthen fiscal governance by enhancing transparency, accountability, and adopting performance-based allocation mechanisms. Stronger coordination between central and local governments, supported by the integration of technology in planning and monitoring processes, can further improve efficiency and reduce regional disparities. Overall, education expenditure should be directed not only toward achieving technical efficiency but also toward ensuring equitable educational outcomes that strengthen human capital development and national competitiveness.

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Contact Name
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Contact Email
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Phone
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Journal Mail Official
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Editorial Address
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Location
Kota surabaya,

Jawa timur

INDONESIA