The Effects of Electricity Consumption on Electrification Access on Economic Growth in Papua Province, Indonesia Jonathan Cosmus Karay 1,2* , Firmansyah 2 , Fransiscus Xaverius Sugiyanto 2 , Wahyu Widodo 2 1 Faculty of Economics and Business, Ottow Geissler University, Papua 99224, Indonesia 2 Faculty of Economics and Business, Diponegoro University, Semarang 50275, Indonesia Corresponding Author Email: jckaray.undip@gmail.com https://doi.org/10.18280/ijsdp.170608 ABSTRACT Received: 14 April 2022 Accepted: 15 July 2022 The current research aims to analyze the influence of electricity and infrastructure on regional economy. The study empirically tested the impact of the independent constructs on electrification access and economic growth in Papua, Indonesia by using mediating role of electricity consumption. Independent variables examined in this study are electrical installations and electricity capital, while the dependent variables are measured by using labor absorption. This study specifically investigates the relationship between these variables with a cross-sectional study model, conducted at Papua Province, Indonesia with data from 2012 to 2016. The results show that electricity consumption in Papua Province is significantly influenced by electrical installation, household electricity capital and industrial electricity capital. Furthermore, electricity consumption in general affects employment. The test of the mediating variable shows the role of the consumption variable in the ratio of electrification and employment. Theoretical implication posed from the findings is about the relationship between economic growth and energy infrastructure which is more likely to attract both domestic and foreign investment in a region. The novelty of this research is to reveal the role of electrification in industrialization and employment. Keywords: electricity consumption, industrialization, employment, economic growth, household capita 1. INTRODUCTION Access to affordable energy has substantial impacts on the welfare and the economy of nation. There is a gap in access to energy between developed and developing countries. Since today's economy is highly dependent on energy, in turn, the economy and per capita income are also affected by energy availability. Access to cheap energy leads to industrialization and employment, especially in developing countries. In addition, the inequality in access to energy that developing countries suffer, especially electricity, poses greater challenges to the provision of education and basic needs [1]. Access to electricity also affects the ability of developing country governments to provide access to information, sanitation, health and adequate housing [2]. Today, electricity is the most basic energy need, not only for individuals and families, but also for the socio-economic development of a country [3]. Increasing welfare and meeting needs is highly dependent on access to electricity. In increasing economic development, electricity consumption is also an indicator that reflects the level of a country's social development. Kanagawa and Nakata [4] also stated that socio- economically, increasing access to modern energy in the form of electrical energy will drastically improve the quality of life. Previous studies have confirmed the relationship between installation development and electricity capital for both industry and households in regional economic development. By analyzing the relationship between the effect of greenhouse gas emissions from electricity generation, electricity consumption, economic growth and population in Indonesia using time series data from 1971-2011 with the restricted VAR model and VAR structural analysis, Basyiran [5] shows that electricity consumption, growth economy and population can influence changes in the intensity of greenhouse gas emissions. In addition, economic and population growth can affect the amount of electricity consumption, and population is a variable that can determine the level of economic growth [5- 7]. In particular, by investigating electricity consumption in the industrial sector, Axella and Suryani [8] show that electricity is in the industrial sector, because industry has an important role in the government's economic growth. This is because the industrial sector requires electrical resources to run its business. The electrification ratio in Indonesia has increased in the last decade. Figure 1 shows the electrification ratio increasing from 76.56% in 2012 to 99.45% in 2021. Source: [9] Figure 1. Electrification rate in Indonesia, 2012-2020 International Journal of Sustainable Development and Planning Vol. 17, No. 6, October, 2022, pp. 1747-1752 Journal homepage: http://iieta.org/journals/ijsdp 1747