The Contribution of Digital-Based MSMEs to the Improvement of the Local Economy in Dempo Utara District, Pagar Alam City, South Sumatra, Indonesia

Abstract

Digital transformation has become a strategic instrument in strengthening the performance and competitiveness of Micro, Small, and Medium Enterprises (MSMEs), particularly in rural areas. This study aims to examine the contribution of digital-based MSMEs to improving the local economy in Dempo Utara District, Pagar Alam. This research employed a mixed-methods approach using questionnaires, observations, and interviews with MSME owners who have adopted digital platforms such as social media and online marketplaces. The quantitative data were analyzed using descriptive statistics, while qualitative data were analyzed through thematic analysis to understand the impact of digital adoption on business development and local economic conditions. The findings indicate that digital-based MSMEs have significantly improved product marketing, expanded market reach, enhanced product competitiveness, and increased sales and income. Digitalization also contributed to strengthening business sustainability, improving branding and promotion, and creating new economic opportunities within the local community. Furthermore, digital MSMEs play an important role in supporting local economic resilience, job creation, and regional economic growth. These findings highlight the importance of digital transformation in empowering MSMEs and promoting sustainable local economic development. This study contributes to the literature by providing empirical evidence on the role of digital MSMEs in rural economic development and offers practical implications for policymakers and stakeholders in supporting MSME digitalization.