The Tourism-Led Growth Hypothesis in Indonesia
AbstractThis study investigates the relationship between economic growth and tourism in Indonesia for the period of 1995 to 2015. This study uses the Toda-Yamamoto causality test along with its prerequisite test. The results show that tourism causes economic growth and supports the unidirectionalcausal relationship. This finding is also in line with the tourism-led growth hypothesis. As a consequence, the government should pay attention on the resources allocation for the development of the tourism industry, specifically by supporting infrastructure development and promoting tourism in Indonesia through more advertisements, removal of visa restrictions, and implementation of a discount program for tourist groups. Thus, an intensive government policy is required to increase the international demand for Indonesian tourism and to stimulate the development of either private or public tourism infrastructure.
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