Tourism Spatial Spillover Effect and Economic Growth in Indonesia

Abstract

Economic growth and prosperity are often associated with the development of key sectors such as agriculture, construction, and manufacturing. The importance of tourism in driving economic growth and prosperity is often overlooked. The study focuses on Indonesia and its diverse tourism resources, pointing out that different provinces have varying impacts on the overall economy due to their distinct tourism assets. Therefore, this study investigates the influence of tourism diversity on regional economic growth. Data were collected from the Central Agency of Statistics (BPS), Ministry of Tourism, and Ministry of Public Works and Housing from 2010 to 2017, using such variables as economic growth, physical investment, population, human capital, and the tourism competitiveness index. Moreover, we considered spatial effects by employing a Spatial Durbin Model (SDM) to account for the interdependence of different regions in Indonesia. The results reveal that tourism spillovers occur between provinces, meaning that tourism development in one area is influenced not only by its own resources but also by neighbouring provinces. The spatial regression analysis demonstrates that neighbouring areas have a positive impact on each other, reinforcing the idea that tourism development tends to cluster geographically. This suggests that regional tourism development policies should consider these spatial dependencies, aiming for integrated programmes that have an impact not only within a single area but also between regions. The suggestion for further research is to use a type of spatial weight in the form of inter-regional tourist moving, namely the movement of tourists between provinces in Indonesia.