DOES TOURISM SECTOR MATTER IN REGIONAL ECONOMIC DEVELOPMENT

Abstract

The regional autonomy policy is expected to promote the government in carrying out fiscal management independently. However, local own-source revenue was the only source of revenue and measurement of independence and it has not been achieved optimally. Many provinces failed to fully support regional needs, even though it has the highest tourism sector revenue contributors. The purpose of this study is to analyze the influence of the tourism sector in terms of supply and demand on regional independence. To analyze the regional income model seen from the contribution of the tourism sector by including the lag variable, this study used a Dynamic Panel method which is also known as Partial Adjusted in Central Java Province, Indonesia from 2013-2018. The result showed that the increase in local own-source revenue from the demand side is more elastic than the supply contribution. The addition of new tourist objects without proper management tends not to have a significant impact on regional income. Also, the attraction of people visiting the tourist in Central Java Province is still high because of a significant positive number of tourist arrivals. The government needs to focus on managerial improvements, development, and innovation of existing tourist objects

Keywords

• regional growth
• tourism
• decentralization
• local own source revenue.