The Influence of HDI and Internet Access on Economic Growth in East Java Province

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FORMOSA NEWS - Surabaya - Human Quality Beats Internet Access in Driving East Java Economic Growth, Study Finds. The research was conducted by researchers Ambarwati and Prayudi Setiawan Prabowo from Universitas Negeri Surabaya. Published in July 2026, the study reveals that while both human capital and digital connectivity jointly influence regional expansion, improvements in human resources serve as the primary engine for economic growth across East Java. The authors argue that digital infrastructure yields its highest economic output only when paired with actionable digital literacy, targeted workforce skills, and public spending on education and healthcare.

Background: Addressing Economic Disparities in Java
East Java holds a crucial position in Indonesia’s national economy, contributing 14.46% to the national Gross Domestic Product (GDP). Despite being the nation's second-largest economic contributor, the province faces deep internal economic disparities. Urban centers such as Surabaya and Madiun boast high growth rates and advanced digital infrastructure, whereas rural areas—particularly across the Madura region continue to struggle with lower economic output and lower human development scores. To understand how internal regional factors can bridge these performance gaps, researchers analyzed the interplay between Human Development Index (HDI) metrics and internet penetration rates. Grounded in endogenous growth theory, human capital theory, and the diffusion of innovations framework, the study evaluates how investments in population quality and digital technology diffusion directly influence per capita Gross Regional Domestic Product (GRDP).

Research Methodology
The researchers utilized a quantitative explanatory research design based on secondary panel data collected from Indonesia’s Central Agency of Statistics (BPS).

• Sample & Scope: The dataset covered all 38 regencies and cities in East Java Province across a five-year post-pandemic recovery period from 2020 to 2024, yielding a total of 190 observations.
  
• Analytical Approach: The study implemented a Fixed Effect Model (FEM) in panel data regression to account for unobserved, non-time-varying geographic and institutional differences across regions.
  
• Statistical Controls: To ensure diagnostic accuracy, tests for diagnostic assumptions including multicollinearity, heteroskedasticity, and serial correlation were conducted. Robust standard errors were applied to eliminate potential bias from residual autocorrelation
  

Key Findings: Human Capital Leads, Internet Provides Support
The empirical analysis yielded distinct insights into the factors driving East Java's economic growth rate:

• HDI Drives Per Capita Output: The Human Development Index demonstrated a statistically significant positive effect on GRDP per capita growth ($p = 0.00$). Each single-point increase in a region's HDI score led to a 2.58 percentage point increase in its per capita economic growth rate.
  
• Internet Penetration Shows Statistically Insignificant Direct Impact: Although internet access reached a high provincial average of 93.87%, its direct statistical impact on per capita GRDP growth was positive but statistically insignificant ($p = 0.98$, coefficient of 0.14). This indicates that expanded internet access has not automatically translated into measurable regional economic output on its own.
  
• Simultaneous Combined Effect: When evaluated together, HDI and internet access exerted a statistically significant joint effect on per capita economic growth ($F = 60.38$, $p = 0.00$). The combined model accounted for 45% of the total variation in per capita economic growth across the province’s regencies and cities ($R^2 = 0.45$).
  

Real-World Impact and Policy Implications
These empirical findings demonstrate that expanding digital infrastructure without upgrading human capability creates an economic bottleneck. While internet connectivity expands market access, facilitates e-commerce, and aids micro, small, and medium enterprises (MSMEs), its benefits remain underutilized when citizens primarily consume media rather than engage in digital entrepreneurship or productive business operations. For policymakers, regional planners, and business leaders, the study outlines a clear roadmap for economic intervention:

• Prioritize Human Investment: Public spending must prioritize healthcare, access to education, and purchasing power initiatives. Strengthening human capital directly enhances workforce productivity and the capacity to generate added economic value.
  
• Couple Digital Infrastructure with Digital Literacy: Telecommunications policies should move beyond building network access points. Local governments must offer targeted digital literacy programs, vocational training, and digital adoption strategies for MSMEs to turn internet connectivity into productive output.
  
• Foster Regional Equity: Integrated policy initiatives addressing education, health, and productive technology use can help narrow economic gaps between major metropolitan hubs and lagging rural regencies.
  

Author Profiles
Ambarwati, S.E. Universitas Negeri Surabaya. Expertise: Development Economics, Regional Economic Growth, and Applied Econometrics
Prayudi Setiawan Prabowo, S.E., M.SEI. Universitas Negeri Surabaya. Expertise: Economic Policy, Human Capital Development, and Public Sector Economics

Source
Ambarwati, Prayudi Setiawan Prabowo. The Influence of HDI and Internet Access on Economic Growth in East Java Province. Formosa Journal of Applied Sciences (FJAS). Vol. 5, No. 7, 2026 (Halaman 1625–1642)
DOI: https://doi.org/10.55927/fjas.v5i7.88
URL: https://journalfjas.my.id/index.php/fjas