DIGITAL TRANSFORMATION AND REGIONAL DEVELOPMENT DISPARITIES IN INDONESIA

Abstract

One of the oldest economic problems in Indonesia is regional disparity, especially with regard to the increasing gaps between Java and non-Java areas. While digitalization offers some promising prospects in this respect, recent studies suggest that it may even more firmly cement existing regional disparities due to self-reinforcing mechanisms. This study will, therefore, try to unravel how digital transformation is interacting with traditional development disparities in the universe of Java-biased development, examine processes whereby Circular and Cumulative Causation operates in the digital age, and finally devise evidence-based policy recommendations toward more even regional development. Using qualitative meta-synthesis methodology, this research analyzed Scopus-indexed papers from 2019-2024, following systematic approaches outlined by Sandelowski & Barroso for synthesizing qualitative findings. The results identify four interconnected components—digital infrastructure, human capital, economic activity, and institutional capacity—that create self-reinforcing cycles affecting regional development. Results also show how Java's dominance-57.04% of GDP compared to the 2.70% of Maluku-Papua-is further being consolidated through digital imbalances, reflected in disparate internet diffusion levels and trends of business digital uptake. The paper contributes theoretically by placing identification of key "breaking points" where focused interventions can break vicious self-reinforcing feedback cycles while making pragmatic policy suggestions on how to bring more balanced regional development to Indonesia's digital economy.