Repositioning the Village Development Index asAI-Enabled Rural Infrastructure: Strategic Pathways for Financial Innovation and Inclusive Growth in Indonesia

Abstract

This study systematically reviews Indonesia's Village Development Index (Indeks Desa Membangun or IDM) from 2015 to 2025, tracing its evolution from a basic rural classification tool to a multidimensional, digitally compatible infrastructure with untapped potential for artificial intelligence (AI) integration. Applying the PRISMA protocol, this review synthesizes 32 peer-reviewed articles to evaluate IDM’s conceptual development, methodological challenges, and opportunities for embedding AI into rural governance systems. Recent enhancements, such as IDM+, Precision Village Data (DDP), and smart village frameworks, demonstrate significant strides toward intelligent policy design. However, persistent fragmentation and minimal AI adoption hinder its strategic impact. This paper argues that IDM’s transformation offers a timely opportunity to align with AI-driven financial innovation. By leveraging machine learning, geospatial analytics, and real-time dashboards, IDM can be reimagined as a dynamic infrastructure to inform ecological fiscal transfers, rural credit scoring, and micro-insurance modeling. These capabilities mirror...