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The role of tourism toward economic growth in the local economy

Author

Listed:
  • Suhel
  • Abdul Bashir

    () (Department of Development Economics, Universitas Sriwijaya, Indonesia
    Department of Development Economics, Universitas Sriwijaya, Indonesia)

Abstract

This study analyzes the relationship between the number of tourists, tourism investment, government tourism spending, and economic growth in South Sumatra. It uses Granger causality model and simultaneous equation model to estimate the empirical model. The findings show that the number of tourists, the added value of the tourism sector, and the tourism spending of the tourism sector affect economic growth, while tourism investment does not affect the economic growth. In the second model, this study found that economic growth, tourism added value, tourism, and government tourism spending affect the number of tourists. This study implies that government policy has an important role in encouraging the tourism sector development which is indicated the contribution this sector on economic growth.

Suggested Citation

  • Suhel & Abdul Bashir, 2018. "The role of tourism toward economic growth in the local economy," Economic Journal of Emerging Markets, Universitas Islam Indonesia, Department of Economics, vol. 10(1), pages 32-39, April.
  • Handle: RePEc:uii:journl:v:10:y:2018:i:1:p:32-39
    DOI: 10.20885/ejem.vol10.iss1.art4
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    File URL: https://journal.uii.ac.id/JEP/article/download/7714/8073
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    File URL: https://journal.uii.ac.id/JEP/article/view/7714/8073
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    References listed on IDEAS

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    2. Christian Dreger & Dierk Herzer, 2013. "A further examination of the export-led growth hypothesis," Empirical Economics, Springer, vol. 45(1), pages 39-60, August.
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    4. Andrew Phiri, 2016. "Tourism and Economic Growth in South Africa: Evidence from Linear and Nonlinear Cointegration Frameworks," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 14(1 (Spring), pages 31-53.
    5. Bichaka Fayissa & Christian Nsiah & Badassa Tadasse, 2007. "The Impact of Tourism on Economic Growth and Development in Africa," Working Papers 200716, Middle Tennessee State University, Department of Economics and Finance.
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    7. Cheam Chai Li & Rosli Mahmood & Hussin Abdullah & Ong Soon Chuan, 2013. "Economic Growth, Tourism and Selected Macroeconomic Variables: A Triangular Causal Relationship in Malaysia," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 7(2), pages 185-206, May.
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    10. Juan Gabriel Brida & Silvia London & Mara Rojas, 2013. "A Dynamic Model of Tourism and Economic Growth: the Role of Physical and Human Capital," Economics Bulletin, AccessEcon, vol. 33(2), pages 1361-1373.
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    Cited by:

    1. repec:gam:jsusta:v:11:y:2019:i:2:p:371-:d:197178 is not listed on IDEAS
    2. Adeola, Ogechi & Evans, Olaniyi & Hilson, Ebo, 2018. "Tourism and economic wellbeing in Africa," MPRA Paper 93685, University Library of Munich, Germany.

    More about this item

    Keywords

    tourists; investment of tourism; government spending of tourism; and economic growth.;

    JEL classification:

    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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