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Does tourism growth create a trickle-down effect in rural areas?

Author

Listed:
  • Ghozali Maski
  • Faishal Fadli
  • Vietha Devia Sagita Sumantri

Abstract

This research looks at the economic growth of the tourism sector as its growth point. Batu City has implemented the tourism sector as a growth point and has succeeded in creating very rapid economic growth and within a relatively short time. By using the error correction model, the results show that there is a positive two-way relationship between income inequality and economic growth and a negative two-way relationship between income inequality and the unemployment rate in both the long- and short-term. The economic growth of the tourism sector has resulted in a profound change in the people of Batu City from farmers to entrepreneurs (informal sector). While people who work in the informal sector are included in the figures for unemployment rate, evenly distributed income can occur because the informal sector can create jobs and absorb employment. As a result, a trickle-down effect occurred in Batu City.

Suggested Citation

  • Ghozali Maski & Faishal Fadli & Vietha Devia Sagita Sumantri, 2020. "Does tourism growth create a trickle-down effect in rural areas?," International Journal of Services, Economics and Management, Inderscience Enterprises Ltd, vol. 11(3), pages 191-220.
    • Handle: RePEc:ids:injsem:v:11:y:2020:i:3:p:191-220
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