Analysis of the Role of Tourism in the Economy in Indonesia

Abstract

If well exploited and closely related to other economic sectors, tourism is believed to function as an engine of growth. This research shows how the role of the tourism sector can be a factor of development in increasing economic growth by offering a variety of employment opportunities and by increasing foreign income in the country of Indonesia which is used to increase other economic activities. Activities developed as a result of tourism include entertainment, transportation services, rental and sale of handicrafts, tour guides, restaurants, hotels, manicures, and beach pedicures and more. These activities are interrelated with financial inclusion. Tourism has a strong multiplier effect that contributes to development. Through the consumption of local tourism products and other local but non-tourism products, tourism can function as a vehicle for the development of many small businesses. This research concludes that the tourism sector needs to be sustainable in order to successfully play its role as a development factor. The results of this study note that the short-term and long-term impact of foreign exchange and open unemployment rates have a significant effect on economic growth in the tourism sector.