Empowering Rural Transformation: The Role of Good Governance in Developing Smart Villages in Indonesia

This study investigates the influence of good village governance on smart village development in Indonesia, offering evidence-based insights for policymakers and local governments. This study constructs a Smart Village Index for 84,647 villages using the 2021 Village Potential Survey (PODES) and polychoric-based Principal Component Analysis (PCA). Due to the lack of standardized metrics, we propose a new quantitative framework to measure development potential. The research addresses two questions: the regional distribution of smart village potential in Indonesia and the impact of good governance on this development. The findings reveal significant regional disparities: DI Yogyakarta, DKI Jakarta, and Bali demonstrate high potential, while Papua and West Papua score the lowest. These variations reflect differences in infrastructure and service access. Regression analysis confirms that good village governance significantly enhances smart village development. In contrast, corruption shows a negative but inconsistent effect. The study highlights the importance of investing in digital infrastructure, promoting transparency, and encouraging community participation to bridge regional gaps. These findings support targeted policy interventions to advance smart village initiatives, particularly in underserved
areas, and contribute to sustainable rural transformation in
Indonesia.