The Causal Relationship between Tourist Arrivals and Economic Growth: Evidence from Indonesia
Abstract
The main motivation behind this research because nowadays tourism becomes one of the major industries in Indonesia. However, literature on the causal relationship between the cyclical components of tourist arrivals and economic growth revealed inconclusive especially in the developing countries as Indonesia. This paper aims at investigating whether foreign tourist arrivals contribute to economic growth evidence from Indonesia over the period 2004 (1) – 2016 (12). Then, this research was applied the vector autoregressive (VAR) model. Afterwards, we exploited Hodrick-Prescott de-trending procedure to obtain cyclical components of tourist arrivals and economic growth. By using the test of Granger-causality, we found that causality running from tourist arrivals to economic growth. Furthermore, the VAR model shows that tourist arrivals were pro-cyclical to economic growth, implied that the increase of tourist arrivals promote the economic growth so that foreign tourist arrivals could be the key to escalate Indonesia’s economic growth in short term.
References
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[32] Ouerfell, C. 2008. Co-integration Analysis of Quarterly European Tourism Demand in Tunisia, Tourism Management, 29(1): 127-37. DOI: 10.1111/146-9396.00305
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[2] Balaguer, L. and Cantavella-Jorda, M. 2002. Tourism as a Long-run Economic Growth Factor: The Spanish Case. Applied Economics, 34: 877-84. DOI: 10.1080/00036840110058923
[3] Boediono. 2016. Ekonomi Indonesia dalam Lintasan Sejarah (Indonesia’s Economic in History Line), Jakarta: Mizan.
[4] Bouzahzah, M., and Younesse EL Menyari. 2013. The Relationship between International Tourism adn Economic Growth; The Case of Morocco and Tunisia. The Journal of North African Studies, 18(4): 1-10.
[5] Brida, J.G., Carrera, E. and Risso, W.A. 2008. Tourism’s Impact on Long-Run Mexican Economic Growth. Economics Bulletin, 3(7): 1-10.
[6] Chang, C. and McAleer, M. 2012. Agregation, Heteregeneous Autoregression, and Volatiloty of Daily International Tourist Arrivals and Exchange Rate. Japanese Economic Review, 63(3): 397-419.
[7] Cortes-Jimenez, I., and Pulina, M. 2006. A Further Step into The ELGH and TLGH for Spain and Italy. FEEM Working Paper. 118(06), Fondazione Eni Enrico Mattei, Milan.
[8] Dristakis, N. 2004. Tourism as a Long-run Economic Growth Factor: an Empirical Investigation for Greece Using Causality Analysis. Tourism Economics, 10(3): 305–16. DOI: 10.5367/0000000041895094
[9] Durbarry, R. 2004. Tourism and economic growth: The case of Mauritius. Tourism Economics, 10: 389-401. DOI: 10.5367/0000000042430962
[10] Eeckels, B., Filis, G. and Leon, C. 2006. Cyclical Movements of Tourism Income and GDP and their Transmission Mechanism: Evidence from Greece, paper presented in the 24th EuroCHRIE Congress, Thessaloniki, Greece, 26-28 October.
[11] Ekanayake, E.M. and Long, A. E. 2012. Tourism Development and Economic Growth in Developing Countries. The International Journal of Business and Finance Research, 6(1): 51-63.
[12] Enders, W. 2004. Applied Econometric Time Series, Second edition, New York: John Wiley & Son.
[13] Fitriani, E. 2017. “2019: Pariwisata Sumbang PDB Terbesar.” Investor Dialy Indonesia. Available at: http://id.beritasatu.com/home/2019-pariwisata-sumbang-pdb-terbesar/162269
[14] Gouveia, P. and Rodrigues, P. 2005. Dating and Synchronizing Tourism Growth Cycles. Tourism Economics, 11(4): 501-515. DOI: 10.5367/000000005775108746
[15] Gunduz, L. and Hatemi, J.A. 2005. Is the Tourism-Led Growth Hypothesis Valid for Turkey? Applied Economics Letters, 12(8): 499–504. DOI: 10.1080/13504850500109865
[16] Hazari, B.R and Sgro, P.M. 1995. Tourism and growth in a dynamic model of trade. The Journal of International Trade and Economic Development, 4: 253-256. DOI: 10.1080/09638199500000019
[17] He, and Zheng, X. 2011. Empirical Analysis on the Relationship between Tourism Development and Economic Growth in Sichuan, Journal of Agricultural Science, 3(1): 212-217.
[18] Kum, H. et al. 2015. Tourism and Economic Growth: The Case of Next-11 Countries, International Journal of Economics and Financial Issues, 5(4): 1075-1081
[19] Kuncoro, Haryo, 2016. Do Tourist Arrivals Contribute to the Stable Exchange Rate? Evidence from Indonesia. Journal of Environmental Management and Tourism. (Volume VII, Spring), 1(13): 63-79. DOI: 10.14505/jemt.v7.1(13).06
[20] Kydland, F.E. and Prescott, E. 1990. Business Cycles, Real Facts, and a Monetary Myth, Federal Reserve Bank of Minneapolis Quarterly Review, 14(2): 3-18.
[21] Lanza, A. and Pigliaru, F. 1995. Specialisation in Tourism: The Case of a Small Open Economy, in P.Nijkamp and P. Coccossis (eds). Sustainable Tourism Development, Aldershot: Avebury.
[22] Lean, Hooi Hooi, et.al. 2004. Tourism and Economic Growth: Comparing Malaysia and Singapore, International Journal of Economics and Management, 8(1). 139-157.
[23] Lee, Chien-Chiang, and Chun-Ping Chang. 2008. Tourism development and economic growth: A closer look at panels, Tourism Management, 29. 180-192. DOI: 0.1016/j.tourman.2007.02.013
[24] Lucas, R.E. 1977. Understanding Business Cycles, in K. Brunner and A.H. Meltzer, (eds.), Stabilization of the Domestic and International Economy, Amsterdam: North Holland.
[25] Ministry of Tourism. 2015. Laporan Akuntabilitas Kinerja Kementerian Pariwisata Tahun 2015. Jakarta: Kementerian Pariwisata, 52-54.
[26] Ministry of Tourism. 2016. Data Kunjungan Wisatawan Mancanegara Bulan Desember Tahun 2016. Viewed 15092017, www.kemenpar.go.id.
[27] Mudrikah, Alfiah et al. 2014. Kontribusi Sektor Pariwisata terhadap GDP Indonesia Tahun 2004-2009, Economics Development Analysis Journal, 3 (2): 362-371. DOI: 10.15294/edaj.v3i2.3844
[28] Nirwandar, Sapta. Pembangunan Sektor Pariwisata di Era Otonomi Daerah (online). Available at: www.kemepar.go.id/usefiles/file/440__1257PEMBANGUNANSEKTORPARIWISATA1.pdf
[29] Nizar, M. A. 2011. Pengaruh Pariwisata Terhadap Pertumbuhan Ekonomi di Indonesia. Jurnal Kepariwisataan Indonesia, 6(2): 195-211.
[30] Oh, C.K. 2005. The Contribution of Tourism Development to Economic Growth in the Korean Economy. Tourism Management, 26: 39–44. DOI: 10.1016/jtourman.2003.09.2014
[31] Ongon, S. and Demiroz, D.M. 2005. The Contribution of Tourism to the Long-run Turkish Economic Growth. Ekonomicky Casopis, 53(9): 880–94.
[32] Ouerfell, C. 2008. Co-integration Analysis of Quarterly European Tourism Demand in Tunisia, Tourism Management, 29(1): 127-37. DOI: 10.1111/146-9396.00305
[33] Pallage, S. and Robe, M.A. 2001. Foreign Aid and the Business Cycle. Review of International Economics, 9(4): 641-72.
[34] Shakouri, Bahram et al. 2017. International Tourism and Economic Growth and Trade: Variance Decomposition Analysis. Journal of Tourism and Hospitality, 6(3): 1-11
[35] Shan, J. and Wilson, K. 2001. Causality between trade and tourism: empirical evidence from China. Applied Economics Letters, 8(4): 279-283. DOI: 10.1080/135048501750104114
[36] Sharpley, R. and Telfer, D.J. 2002. Tourism and Development: Concepts and Issues. Channel View Publications, Clevedon.
[37] Terzi, Harun. 2015. Is The Tourism-Led Growth Hypothesis (TLGH) Valid For Turkey?. Doğuş Üniversitesi Dergisi, 16 (2): 165-178.
[38] UNWTO. 2007. UNWTO Annual Report 2007. UNWTO: Madrid.
[39] UNWTO. 2012. UNWTO Tourism Highlights 2012 Edition. UNWTO: Madrid.
[40] UNWTO. 2015. UNWTO Tourism Highlights 2015 Edition. UNWTO: Madrid.
[41] UNWTO. 2017. UNWTO Tourism Highlights 2017 Edition. UNWTO: Madrid.
[42] Witt, S.F. and Song, H. 2000. Forecasting Future Tourism Flows, in S. Medlik and A. Lockwood, (eds), Tourism and Hospitality in the 21st Century, Butterworth-Heinemann, Oxford: 106-18.
Published
2018-10-17
How to Cite
FADILAH, Muhamad Rifki; KUNCORO, Haryo; SEBAYANG, K. Dianta A..
The Causal Relationship between Tourist Arrivals and Economic Growth: Evidence from Indonesia.
Journal of Environmental Management and Tourism, [S.l.], v. 9, n. 4, p. 721-732, oct. 2018.
ISSN 2068-7729.
Available at: <https://journals.aserspublishing.eu/jemt/article/view/2348>. Date accessed: 19 nov. 2024.
doi: https://doi.org/10.14505//jemt.v9.4(28).05.
Section
Article
Copyright© 2024 The Author(s). Published by ASERS Publishing 2024. This is an open access article distributed under the terms of CC-BY 4.0 license.