Policy Roadmap For Industry 4.0 And Economic Growth In Indonesia: ASEAN Comparative Insights

This study investigates the dynamic interactions among Indonesia’s key macroeconomic variables—GDP growth, ICT investment, foreign direct investment (FDI), inflation, and the BI7DRR policy rate—using a Vector Autoregression (VAR) framework. Stationarity tests confirm the reliability of the data, while Impulse Response Function (IRF) and Variance Decomposition (VD) analyses provide insights into the magnitude, persistence, and structural contributions of shocks. The results demonstrate that ICT investment and FDI are the most significant drivers of long‑term growth, with ICT shocks consistently yielding positive and persistent effects on GDP, and FDI explaining an increasing share of variance over longer horizons. Inflation shocks, by contrast, exert negative short‑run effects, underscoring the vulnerability of emerging economies to price instability. BI7DRR plays a stabilizing role, moderating inflation volatility but exerting weaker direct influence on GDP growth. Fiscal policy, particularly government spending on digital infrastructure, complements ICT adoption and strengthens the Industry 4.0 roadmap. The synergy between ICT and FDI creates a virtuous cycle of industrial modernization, export competitiveness, and resilience against external shocks. Overall, the findings highlight the importance of coherent policy coordination—leveraging ICT and FDI as structural growth drivers while ensuring monetary and fiscal stability—to secure Indonesia’s successful transition toward Industry 4.0.