Quantifying Internet's Economic Effects on Consumption: A Southeast Asian Study Using Econometric Models

Abstract:

This study investigates the economic effects of internet usage on consumption patterns in five Southeast Asian countries – Vietnam, Singapore, Thailand, Indonesia, and Malaysia – over the period from 1996 to 2023. Utilizing panel data regression techniques, including Fixed Effects Model (FEM), Random Effects Model (REM), and Driscoll-Kraay standard errors, the analysis is based on data sourced from the World Bank (2025). The findings reveal that internet usage positively influences consumption, achieving statistical significance at the 5% level. Economic growth demonstrates a strong positive correlation with consumption at the 1% significance level, while trade openness exhibits a negative impact at the 10% level. These results underscore the necessity of improving digital infrastructure, refining regulatory frameworks, and strengthening cybersecurity to boost consumption. Based on the theoritical and empirical basis, the study points to increased consumer demand as a key driver for macroeconomic policy. The importance of this research is heightened by the rising prominence of the digital economy globally, especially in the aftermath of the COVID-19 pandemic. As Southeast Asia emerges as a pivotal economic region, the study offers crucial insights for policymakers aiming to leverage internet expansion for sustainable economic progress.