• Keshmeer Kanewar Makun University of the South Pacific
  • T.K. Jayaraman University of Tunku Abdul Rahman
Keywords: ICT, Remittances, Financial Sector Development, Economic Growth


This study examines the role of ICT as a factor in Indonesia’s financial sector development, remittances, and economic growth nexus using annual data from 1984-2017. We use the bounds testing procedure based on the Autoregressive Distributed Lag framework and the neoclassical growth model. The findings of the study reveal that ICT has indeed emerged as a significant factor in the remittance-growth nexus by playing a complementary role in financial sector development. The policy implication is that ICT needs to be supported at all levels and the financial inclusion process should be carried forward as it has all the potential to speed up economic growth and development.


Download data is not yet available.


Adams, Jr., R. & Cuecuecha, A. (2010). The Economic Impact of International Remittances on Poverty and Household Consumption and Investment in Indonesia (Policy Research Working Paper 5433). Washington, D.C.: World Bank.

Adams, R., & Page, J. (2005). Don International Migration and Remittances Reduce Poverty in Developing Countries? World Development, 33, 1645–1669.

Adams R.H. & Cuecuecha A. (2013). The Impact of Remittances on Investment and Poverty in Ghana. World Development, 50, 24-40.

Aghaei, M. & Rezagholizadeh, M. (2017). The Impact of Information and Communication Technology (ICT) on Economic Growth in the OIC Countries. Economic and Environmental Studies, 17, 255-276.

Aggarwal, R., Demirgüç-Kunt, A., & Pería, M. (2011), Do Remittances Promote Financial Development? Journal of Development Economics, 96, 255-264.

Ahmed, E & Ridzuan, R. (2013). The Impact of ICT on East Asian Economic Growth: Panel Estimation Approach. Journal of the Knowledge Economy, 4, 540-555.

Amuedo-Dorantes C. & Pozo S. (2010). Accounting for Remittance and Migration Effects on Children’s Schooling. World Development, 38, 1747-1759.

Aziz, I. (2018). Development and shortcomings of Indonesia’s financial sector, inVolz, U., Morgan, P.J. & Yoshino, N. (ed). Routledge Handbook of Banking and Finance in Asia, retrieved from

Bachtiar, P. B. (2011). Migration Outflow and Remittance Patterns in Indonesia: National as well as Subnational Perspective. Philippine Journal of Development No. 70.

Bettin, G., & Zazzaro, A. (2009). Remittances and Financial Development: Substitutes or Complements in Economic Growth? (Mo.Fi.R. Working Papers 28). Money and Finance Research Group (Mo.Fi.R.), University Politecnica Marche, Department of Economics, Ancona.

Bosworth, Barry P. & Collins, M. (2003). The Empirics of Growth: An Update, Brookings Papers on Economic Activity, 2, 113–206.

Calderon, C., Fajnzylber, P. & Lopez, J. H. (2008). Remittances and growth: the role of complementary policies. In Fajnzylber, P. and Lopez, J. H. (eds), Remittances and Development: Lessons from Latin America. World Bank.

Chami, R., Barajas, A, Cosimano, T., Fullenkamp, C., Gapen, M., & Montiel, P. (2008). Macroeconomic Impacts of Remittances (IMF occasional paper 259). International Monetary Fund.

Chakraborty, C. & Nandi, B. (2003). Privatisation, telecommunications and growth in selected Asian countries: an economic analysis. Communication Strategies, 52, 31-47.

Chu, N., Oxley, L. & Carlaw, K. (2005). ICT and causality in New Zealand economy. Proceedings of the 2005 International conference on simulation and Modelling.

Cronin, F. J., parker, E. B., Colleran, E. K. & Gold, M.A. (1991). Telecommunications Infrastructure and Economic Growth: An Analysis of Causality. Telecommunication Policy, 15, 529-535.

Dutta, A. (2001). Telecommunications and Economic Activity: An Analysis of Granger Causality. Journal of Management and Information System, 17, 71-95.

Ebeke, C. (2014). Private saving accelerations. (IMF Working Paper 14/223). International Monetary Fund.

Edwards, A.C. & Ureta, M. (2003). International Migration, Remittances and Schooling: Evidence from Salvadore. Journal of Development Economics, 51, 387-411.

Freund, B., König, H., & Roth, N. (1997). Impact of Information Technologies on Manufacturing. International Journal of Technology Management, 1, 215–28.

Giuliano, P. & Ruiz-Arranz, M. (2009). Remittances, Financial Development and Growth, Journal of Development Economics, 90, 144-52.

Hartarto & M. Azizurrohman (2018). Testing the Gravity model of Remittance Inflows: the case of Indonesia. Paper presented at the 9th International Conference on Socio-economic and Environmental Issues in Development, Hanoi, Vietnam, May 2018.

Hildebrandt, N. & McKenzie, D.J. (2005). The Effects of Migration on Child Health in Mexico (Policy Research Working Paper Series 3573), World Bank.

Ishida, H. (2015). The Effect of ICT Development on Economic Growth and Energy Consumption in Japan. Telematics and Informatics, 32, 79-88.

ILO. (2015). Indonesia: Decent work for Indonesian Migrant Workers. International Labour Organization. Retrieved from

Jayaraman, T. K., & Cen, H. (2016). Role of Financial Sector in The Remittances-Growth Nexus in Fiji. Remittances Review, 1, 17-36.

Jordan J., & Katz, J. (1999). Banking in the Age of Information Technology. Regional review, 9, 39-50.

Kumar, R. R., Kumar, R. D. & Patel, A. (2015). Accounting for Telecommunications Contribution to Economic Growth: A Study of Small Pacific Island State. Telecommunications Policy, 39, 284–295.

Leon-Ledesma, M. & Piracha, M. (2001). International Migration and the Role of Remittances in Eastern Europe, Studies in Economics, Department of Economics, University of Kent.

Lichtenberg, F. (1995). The output contributions of computer equipment and personnel: A firm-level analysis. Economics Innovations and New Technology, 3, 210-217.

Lichtenberg, F.R. (1995). The Output Contributions of Computer Equipment and Personal: A Firmlevel Analysis. Economics of Innovation and New Technology, 3, 201-217.

Majeed, M.T & T. Ayub (2018). Information and Communication Technology (ICT) and Economic Growth Nexus: A Comparative Global Analysis. Pakistan Journal of Commerce and Social Sciences, 12, 443-476.

Mashayekhi, M. (2014). Remittances and Financial Inclusion. Paper presented at the 13th Coordination Meeting on International Migration, New York 12-13 February 2015, UNCTAD.

Mohan, R., & Ray, P. (2017). Indian Financial Sector: Structure, Trends and Turns (IMF Working Paper 17/7). International Monetary Fund.

Mongardini, J & Rayner, B. (2009). Grants, Remittances, and the Equilibrium Real Exchange Rate in Sub-Saharan African Countries (IMF Working Papers 09/75), International Monetary Fund.

Narayan, P.K. (2005). The Saving and Investment Nexus for China: Evidence from Cointegration Tests. Applied Economics, 37, 1979–1990.

Nahar, F. H., & Arshad, M. N. M. (2017). Effects of Remittances on Poverty Reduction: The Case of Indonesia. Journal of Indonesian Economy and Business, 32, 163–177. 27.

Nahar, F.H, Adha, A., & Azizurrohman (2018). Effects of Remittances on Economic Growth in Indonesia. Paper presented at the 9th, International Conference on Socio-economic and Environmental Issues in Development, Hanoi, Vietnam, May 2018

Niebel, T. (2018). ICT and Economic Growth–Comparing Developing, Emerging and Developed Countries. World Development, 104, 197-211

Nyamongo, E. M., Misati, R. N., Kipyegon, L., & Ndirangu, L. (2012). Remittances, financial development and economic growth in Africa. Journal of Economics and Business, 64, 240-260.

Page J. & Adams, R.H. Jr. (2003). International Migration, Remittances And Poverty In Developing Countries (World Bank Policy Research Working Paper No.3179), World Bank.

Parinduri, R.A., & Thangavelu, S.M. (2011). Impact of Remittances on Human Capital Development of Children in Indonesia Household. Paper presented at the Conference organized by University of Nottingham, Kuala Lumpur 2010 Retrieved on My 13, 2009 from


Paulson A. & Townsend, R. (2000). Entrepreneurship and Financial Constraints in Thailand. (Working Paper), Evanston/Chicago, Illinois: Northwestern University.

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds Testing Approaches to The Analysis of Level Relationships. Journal of Applied Economics, 16, 289–326.

Pradhan, R.P., Arvin. M., Nair, M., Bennett, S., & Bahmani, S. (2017). ICT-Finance-Growth Nexus: Empirical Evidence from Next-11 Countries. Cuadermo de economia, 40, 115-124.

Radeck, L., Wenninger J., & Orlow D. K. (1997). Industry Structure: Electronic Delivery Potential Effects on Retail Banking. Journal of Retail Banking Services, XIX.

Rahman, M.A. (2010). Gender Dimensions of Remittances: A study of Indonesian Domestic Workers in East and Southeast Asia. UNIFEM.

Ramirez, M.D. Sharma, H. (2008). Remittances and Growth in Latin America: A Panel Unit Root and Panel Cointegration Analysis (Working Paper No. 51.). Department of Economics Yale University,

Rao, B.B. (2010). Estimates of the steady state growth rates for selected Asian countries with an extended Solow model. Economic Modelling, 27, 46-53.

Rao, B. & Rao, M. (2009). Openness and growth in Fiji: some time series evidence. Applied Economics, 41, 1653-1662.

Rao, B. & Rao, M. (2005). Determinants of Growth Rate: Some Methodological Issues, (School of Economics Working Paper Series,No.25), University of the South Pacific, Fiji Islands

Ratha, D., & Mohapatra, S. (2007). Increasing the Macroeconomic Impact of Remittances on Development (1–11). Retrieved from

Rath, B. N., & Hermawan, D. (2019). Do Information and Communication Technologies Foster Economic Growth in Indonesia? Bulletin of Monetary Economics and Banking, 22, 103-122.

Rath, B. N. (2016). Does the Digital Divide Across Countries Lead To Convergence? New International Evidence. Economic Modelling, 58, 75-82.

Sekretariat Wakil Presiden Republik Indonesia (2012), National Strategy for Financial Inclusion Fostering Economic Growth and Accelerating Poverty. Retrieved from e s o u r c e s / 2 8 2 8 8 4 - 1 3 3 9 6 2 4 6 5 3 0 9 1 / 8 7 0 3 8 8 2 - 1 3 3 9 6 2 4 6 7 8 0 2 4 /8703850-1368556147234/Financial-Inclusion-Strategy-Indonesia-2012.pdf, May 20, 2018.

Solow, R. (1956). A Contribution to the Theory of Economic Growth. The Quarterly Journal of Economics, 70, 65-94.

Susilowati, E. & Leonnard, O. (2019) Factors Influencing Financial Inclusion: Evidence from Indonesian Micro Data. Etikonomi, 18: 121-132 United Nations. (2015) Millennium Development Goals and post-2015 Development Agenda., Accessed on August 25, 2016.

United Nations (UN). (2017 a). International Migrant Stock: 1990-2017. UN Department of Economics and Social Affairs, United Nations. Retrieved from

Wilson D. (1993). Assessing the impact of information technology on organizational performance. In R. Banker, R. Kanffan and M. Mahmood (ed). Hansbury: Strategic information technology management idea group.

World Bank Group (2017a). Migration and Remittances: recent Developments and Outlook ( Development Brief 29). World Bank., accessed on June 20 2017.

World Bank (2017b). Financial Sector Assessment: Republic of Indonesia. Wold Bank: Retrieved from

World Bank Group (2018). Migration and Remittances: Recent Developments and Outlook (Migration and Development Brief 30). World Bank.

World Bank (2019). World Development Indicators, Washington, D.C.: World Bank, Retrieved on May 27 2019 from

Yang, D. (2008). International Migration, Remittances and Household Investment: Evidence from Philippines. Economic Journal, 118, 591-630.

PlumX Metrics

How to Cite