The role of tourism toward economic growth in the local economy

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.

Threshold Effect of Tourism Development on Economic Growth Following a Disaster Shock: Evidence from the Wenchuan Earthquake, P.R. China

“…Two primary relationships between tourism development and economic growth have been well documented in tourism economic literature: Linear and non-linear relationships. Many studies have investigated the linear tourism-growth nexus by applying such simple techniques as Granger causality tests [38,[60][61][62], exponential bivariate GARCH-in-mean model [63], Autoregressive Distributed Lag (ADL) model [59,64], Vector Error Correction Model (VECM) [13,65], and a generalized method of moments (GMM) [66].…”

“…First, although the 8-magnitude Wenchuan earthquake caused huge damage to some areas, it may also break the original economic structure and provide one opportunity of tourism for revitalizing the economy for non-tourism-based areas. Secondly, tourism policy is another driving factor of tourism contributing to economic growth [61,66,110,111]. Some polices, such as The Sichuan Tourism Recovery and Reconstruction Plan for the Post-Wenchuan Earthquake (2008-2010), the State Council's Opinion on Supporting Policies and Measurement for Post Recovery and Reconstruction (2008), emphasize tourism as the leading industry of stimulating economic recovery in disaster-hit destinations.…”

The Effect of Investment Efficiency toward Economic Growth in South Sumatera and Jambi Province

“…The investment is one of the regional macroeconomic variables has an important role in creating regional economic growth (Suhel &Bashir, 2018 andYuliana et al, 2019). Investment or capital formation or investment includes expenditures (a) the purchase of various types of capital goods, namely machinery and equipment production, to establish various types of industries and enterprises; (b) expenditure to build residential houses, office buildings, factory buildings, and other buildings; (c) increase the value of the stock of goods that have not been sold, raw materials, and goods that are still in the process of production by the end of the national income calculation.…”

“…The factors that determine a country's economic growth are determined by four factors: (1) capital accumulation, including all new investments, such as land, physical equipment (machinery), and human resources; (2) population growth; (3) technological progress; and (4) the institutional resources (Suhel & Bashir, 2018).…”

“…Investment is one of the important variables in encouraging the creation of economic development. The efforts to achieve high economic growth, the creation of new jobs and poverty alleviation which ultimately puts investment as the main engine of the economy (Suhel & Bashir, 2018). The South Sumatra and Jambi Province are located in Sumatera Island and have similar characteristics.…”