Openness, Digital, and Human Development: Case Study of ASEAN
Countries
Muslim Kamil
*
, Marshal Imar Pratama
Universitas Borobudur Jakarta
Keywords : Openes, Digital, Human Development, ASEAN
Abstract : The ASEAN Economic Community (AEC) is an initiative of ASEAN countries to realize ASEAN into a
solid and calculated economic area in the international economic arena. Human Development Index (HDI)
is a method used to measure the success or failure of a country or region in the field of human development.
As the economy of countries becomes more openness and digital readiness is better, it is expected to
influence the human development index. This study uses a quantitative method with panel data secondary to
the 2011-2015 period by combining 10 ASEAN countries (Indonesia, Malaysia, Singapore, Thailand,
Philippines, Vietnam, Myanmar, Brunei, Laos, Cambodia). From the calculation of T-Test, Effect of
Openness on Human Development Index that it can be concluded that the openness variable partially
influences the significance of the Human Development Index variable and Digital Influence on Human
Development Index, it can be concluded that the Digital variable partially influences the positive
significance of the Human Development Index variable. From the calculation of F value, So that
simultaneously or together the independent variables have a significant effect on the dependent variable.
Coefficient Determination Based on the table above, the Adjusted R-Square value is 0.9977. This shows
that the model is able to explain 0.23% of the dependent variable, while the remaining 0.23% is influenced
by other factors outside the regression model. The human development index in ASEAN countries is
already good, Singapore is the country that has the highest Human Development Index while Myanmar,
Laos, and Cambodia are the countries that have the lowest Human Development Index. To overcome the
increasing human development index in Myanmar, Laos, and Cambodia, an open economy needs to be
improved by conducting international trade. Digital technology is needed to further accelerate the economy
of openness. Government policies of the three countries are to be more open in their economy. It is hoped
that the policies of these three countries can contribute to creating a prosperous society in ASEAN countries
and having a parallel human development index.
1 INTRODUCTION
A country in realizing the welfare of its population is
carried out through the development process.
Development is carried out based on the
development trilogy. The three foundations in the
development trilogy include economic growth,
national equity, and stability. The quality of human
resources has the most important role in economic
development. Human beings act as processors and
become capital in development. Human
Development Index (HDI) is a method used to
measure the success or failure of a country or region
in the field of human development. The Human
Development Index has three indicators, namely: life
expectancy at birth (health), adult literacy rate and
average school length (education), and purchasing
power (income).
The ASEAN Economic Community (AEC) is an
initiative of ASEAN countries to realize ASEAN
into a solid and calculated economic area in the
international economic arena. AEC was formed with
the aim of achieving economic integration in the
ASEAN region which is believed to provide real
benefits for all elements of society.
In order to encourage competitiveness in the
global production chain, the use of technology and
increasing innovation are inevitable. The digital
economy industry (e-commerce) can be seen as an
opportunity and a challenge. As an opportunity
because it provides more space for the business
world so that it encourages the emergence of start-
Kamil, M. and Pratama, M.
Openness, Digital and Human Development: Case Study of ASEAN Countries.
DOI: 10.5220/0008785701870192
In Proceedings of the 2nd International Research Conference on Economics and Business (IRCEB 2018), pages 187-192
ISBN: 978-989-758-428-2
Copyright
c
2020 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
187
ups and new jobs, while as a challenge because of
the immaturity of regulations and infrastructure for
the industry so that e-commerce businesses have not
been maximally competitive, so the implementation
of AEC encourages the occurrence of competition in
the e-commerce world. As the economy of countries
becomes more openness and digital readiness is
better, it is expected to influence the human
development index.
2 LITERATURE REVIEW
2.1 Openness
The increasing variety of products in the domestic
market today cannot be separated from the
increasingly open role of international trade. When
various regulations that are hindering nature agree to
be reduced, the market becomes more open and the
traffic of goods becomes higher. In openness, a party
can consume goods or services that it does not
produce. In openness too, resources will be allocated
to sectors where the country has comparative and
competitive advantages according to Dariah (2005).
The economy in the world is now increasingly open,
for that every country is trying to improve
competitiveness to gain trade form gains.
According Novitasari (2015) In the theory of
economic openness promises challenges and
opportunities that the more open trade between one
country to another can provide opportunities
increasing the market access of domestic products in
the international market as well as challenges to the
competitiveness of domestic industries against
foreign products. However, the benefits received by
each country from economic openness do not show
the same pattern and magnitude. For some
developing countries, openness has a negative
impact on economic growth but will be positively
affected by developed countries that have optimized
their openness to trade.
2.2 Digital
Setiawan (2017) explains that the digital world not
only offers great opportunities and benefits for the
public and business interests. But it also presents
challenges to all areas of life to improve quality and
efficiency in life. The use of various technologies
really makes life easier, but even a digital lifestyle
will depend more on cellphone and computer usage.
According to Musafak (2012) explained that the
digital economy is an economy based on electronic
goods and services produced by electronic
businesses and traded through electronic commerce.
That is, businesses with electronic production and
management processes and who interact with
partners and customers and conduct transactions
through the Internet and Web technologies. Musafak
(2012) also describes the Digital Economy definition
version of Encarta Dictionary is "Business
transactions on the Internet: the marketplace that
exists on the Internet". Understanding Digital
Economy focuses more on transactions and markets
that occur in the internet world. A broader
understanding of just transactions or markets is the
New Economy which according to PC Magazine is
"The impact of information technology on the
economy". The understanding is more emphasized
on the application of information technology in the
economic field. The digital economy is the
economic sector which includes goods and services
when developing, producing, selling or supplying
depends on digital technology.
2.3 Human Development
According to Pratowo (2017) explained Human
Development According to UNDP (1990), human
development is a process of expanding choices for
people to build their lives that are considered
valuable. Some essential things in human
development are so that people can feel a long and
healthy life, knowledgeable, and have access to the
resources needed for a decent life.
Human Development Index In 1990, UNDP
introduced an indicator that had been developed,
which is an indicator that can describe human
development in a measurable and representative
manner. Human Development Index(HDI) figures
range from 0 to 100. The closer to 100, then it is an
indication of better human development. Based on
the value of the HDI, UNDP divided the human
development status of a country or region into three
groups, namely:
a. HDI <50 (low)
b. 50 ≤ HDI <80 (medium / medium)
c. HDI ≥ 80 (high)
3 METHOD
The population that became the object in this study
came from secondary data obtained from the
company Knoema, one of the digital economic data
provider companies. The sampling method uses
purposive sampling method, namely the
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determination of samples with certain
considerations. In this study, the sample was used
using panel data obtained by time series data for 5
years and cross-section data of 10 ASEAN countries
namely Indonesia, Malaysia, Singapore, Philippines,
Thailand, Vietnam, Myanmar, Laos, Brunei,
Cambodia.
3.1 Variable Identification
Research variables are independent and dependent.
for the independent variables that exist in this study
are Openness (X1), Digital (X2) while the dependent
variable Human Development Index (Y).
3.2 Data analysis
The analytical method used in this study is a
quantitative technique that uses mathematical and
statistical models that are classified in certain
categories to facilitate analysis using the Eviews
program. While the analysis technique used is
multiple linear regression analysis techniques to see
the relationship between the independent variable
and the dependent variable. The data used is the
panel data there are three kinds of data panel
estimation techniques, namely pooled the least
square, fixed effect model, and random effect model.
Test the suitability of the model to determine the
most appropriate model is to use the Chow test.
After that, the classic assumption test is a normality
test and also hypothesis testing, namely partial t-test,
simultaneous F test, a test of the coefficient of
determination.
3.3 Econometry Model
The analysis technique in this study is a panel data
regression analysis, while the regression model in
the form of logs can be written as follows:
ln Yit = β0 + β1 ln X1it + β2 ln X2it + eit (1)
Where:
Y = Human Development Index;
X1 = Openes;
X2 = Digital;
i = Country;
and t = time.
4 RESULT
There are three estimations of panel data regression,
namely common effects (OLS), fixed effect models
(FEM) or Random Effect (REM) models.
Determining the panel model that will be used in this
study, several tests must be carried out. Chow Test
that can be used to determine whether the panel data
model can be regressed with common effect models
(OLS), fixed effect models (FEM) or Random Effect
(REM) models. Chow test is used to determine
whether the panel data model is regressed with the
Common Effect model or with the Fixed Effect
model.
H0: The best model is the Common Effect
H1: The best model is the Fixed Effect
4.1 Chow Test
Table 1: Chow Test.
The table above shows that the best model is the
fixed effect because the Chi-square probability value
is below 0.05, this means that H0 is accepted.
Openness, Digital and Human Development: Case Study of ASEAN Countries
189
Table 2: Fixed Effect Model.
From the results of panel data regression with the
selected model is the Fixed Effect model, the
regression model equation is obtained as follows:
Human Development Index = 0.034255
(OPENNESS) + 6.19 (DIGITAL) + e (2)
4.2 Normality Test
Figure 1: Histogram
From the output that has been tested, it states that the
histogram form is distributed symmetrically so that
the residuals are distributed normally. Based on the
JB statistical test, the value is 12.361 with a
probability of 0.002069 while the chi-square value
with significance (α = 5%) is 0.05, so JB < Chi
Square, then H0 is accepted and H1 is rejected
meaning that the residual is normally distributed.
4.3 T-test (Partial)
Table 3: T-test (partial)
Based on the results above as follows:
Effect of Openness on the Human Development
Index. The t-statistical probability value obtained is
0.0003, then the statistical probability <α = 5% is
0.0003 < 0.05. So that it can be concluded that the
openness variable partially influences the
significance of the Human Development Index
variable.
Digital Influence on the Human Development
Index.The obtained t-statistical probability value is
0.0110. Then the statistical probability <α = 5% is
0.0110 < 0.05. So it can be concluded that the
Digital variable partially influences the positive
significance of the Human Development Index
variable.
Table: 4 Human Development Index.
Human
Dev
Index
Indonesia Malaysia Singapore T hailand Philipnes Vietnam Myanmar Laos Brunei Kamboja
2011 0,67 0,67 0,92 0,73 0,67 0,66 0,53 0,55 0,85 0,54
2012 0,68 0,68 0,92 0,73 0,67 0,67 0,54 0,56 0,86 0,55
2013 0,68 0,68 0,92 0,74 0,68 0,68 0,55 0,57 0,86 0,55
2014 0,69 0,69 0,92 0,74 0,68 0,68 0,55 0,58 0,86 0,56
2015 0,69 0,69 0,93 0,74 0,68 0,68 0,56 0,59
0,87 0,56
4.4 F Test (Simultaneous)
From the calculation of F value, it is known that F
arithmetic > F table (1508.939 > 3.18) then H0 is
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190
accepted and H1 is rejected (F arithmetic is in H1
reception area). Then also the probability (prob.) Of
the table above is equal to 0.000 > 0.005, then H0 is
accepted and H1 is rejected. So that simultaneously
or together the independent variables have a
significant effect on the dependent variable.
4.5 Coefficient Determination
Based on the table above, the Adjusted R-Square
value is 0.9977. This shows that the model is able to
explain 0.23% of the dependent variable, while the
remaining 0.23% is influenced by other factors
outside the regression model.
5 DISCUSSION
The human development index in ASEAN countries
is already good, as can be seen in table 4 it can be
explained that Singapore is the country that has the
highest Human Development Index while Myanmar,
Laos and Cambodia are the countries that
have the lowest Human Development Index. To
overcome the increasing human development index
in Myanmar, Laos and Cambodia, an open economy
needs to be improved by conducting international
trade. Digital technology is needed to further
accelerate the economy of openness. Government
policies of the three countries are to be more open in
their economy. It is hoped that the policies of these
three countries can contribute to creating a
prosperous society in ASEAN countries and having
a parallel human development index.
6 CONCLUSION
This study aims to analyze the relationship between
Openness, digital towards ASEAN countries human
development index in the period 2011-2015 using
panel data regression analysis techniques. Based on
the results of statistical tests, the following
conclusions can be drawn:
a. Effect of Openness on Human Development
Index , The t-statistical probability value
obtained is 0.0003, then the statistical
probability <α = 5% is 0.0003 < 0.05. So that
it can be concluded that the openness variable
partially influences the significance of the
Human Development Index variable. Digital
Influence on Human Development Index,
The obtained t-statistical probability value is
0.0110. Then the statistical probability <α =
5% is 0.0110 < 0.05. So it can be concluded
that the Digital variable partially influences
the positive significance of the Human
Development Index variable.
b. From the calculation of F value, it is known
that F arithmetic > F table (1508.939 > 3.18)
then H0 is accepted and H1 is rejected (F
arithmetic is in H1 reception area). Then also
the probability (prob.) Of the table above is
equal to 0.000 > 0.005, then H0 is accepted
and H1 is rejected. So that simultaneously or
together the independent variables have a
significant effect on the dependent variable.
Koefisein Determination Based on the table
above, the Adjustted R-Squere value is
0.9977. This shows that the model is able to
explain 0.23% of the dependent variable,
while the remaining 0.23% is influenced by
other factors outside the regression model.
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