The Effect of Tourism Sectors on ASEAN Countries’ Economic

Growth: Analysis Panel Regression

Hary S. Sundoro and Vishnuvardhana S. Soeprapto

Universitas Bunda Mulia, Jakarta, Indonesia

Keywords: ASEAN, GDP, Panel Regression, Tourism.

Abstract: Tourism industry has been an interesting phenomenon for the countries in ASEAN region because tourism

sector may give a large contribution for ASEAN countries’ GDP. The greater the GDP, the better economic

condition of a country where the GDP itself can be obtained from some sectors and one of them is tourism

sector. By knowing the importance of tourism sector to ASEAN economic, then the countries in ASEAN

region are able to do some acts which are needed to support tourism sector becoming more interesting and

more adequate. Therefore, this research is done to examine the effect of tourism sector which can be separated

into tourist arrival and tourism receipts on ASEAN countries’ GDP. The data were from year 2011 until 2015

and the method is analysis panel regression. The result of this research is expected to answer: 1). The effect

of tourist arrival and tourism receipts on ASEAN countries’ GDP. 2). Then, the result of this research is as

well as to prove that tourism sector affects ASEAN countries’ GDP simultaneously.

1 INTRODUCTION

Every country is willing to increase the growth of

national output in a certain period (Rahardja and

Manurung, 2004). Hence, the number of national

output may represent some important things in

economic sector. National output may be obtained

from some sectors and one of them is from tourism

sector. Tourism industry is so important for the

countries in ASEAN region because most of them

have many magnificent places.

The growth of ASEAN tourism in the last years is

very high. This thing can make the economic climate

among the member countries of ASEAN getting

better. According to the World Economic Forum

(WEF) in 2011, tourism sector provides 4.6 percent

to ASEAN countries’ GDP (Moenir, 2017). For Asia

Pacific region, United Nation World Tourism

Organization (UN-WTO) states that Southeast Asia is

the region that is most closely visited by international

tourist.

Each country in ASEAN will seek to increase its

GDP because it indicates a good economic condition

is happening in that country. However, ASEAN

countries’ GDP always changes. The changing of

GDP in ASEAN countries can be predicted by

knowing tourism indicator. The indicator can be

separated into tourist arrival and tourism receipts

(Phiri, 2015). The stakeholders in ASEAN countries

especially their government is able to see an

indication of changing tourist arrival and tourism

receipts in order to make them setting the right

policies to increase their own GDP.

The growth of tourist arrival in ASEAN countries

continues to grow. Even by looking at CAGR,

ASEAN is one of the regions that sustain the highest

growth from the tourist arrivals aspect from 2010

until 2014, as seen in figure 1.

Figure 1: Growth of Tourist Arrivals from 2010-2014.

The tourism receipts in ASEAN countries

continue to grow as well. In 2015, tourism receipts

contribute 12.4% to GDP in all ASEAN countries. In

180

Sundoro, H. and Soeprapto, V.

The Effect of Tourism Sectors on ASEAN Countries’ Economic Growth: Analysis Panel Regression.

DOI: 10.5220/0008490201800184

In Proceedings of the 7th International Conference on Entrepreneurship and Business Management (ICEBM Untar 2018), pages 180-184

ISBN: 978-989-758-363-6

fact, tourism receipts keep growing during 2000 until

2015 in ASEAN countries as seen in figure 2.

Figure 2: Tourism’s Contribution to ASEAN’s GDP from

2000-February 2016.

The previous research has examined the effect of

tourist arrival and tourism receipts on GDP of a

country. Phiri (2015) tests the effect of tourist arrivals

and tourism receipts on economic growth in South

Africa. His empirical result shows the linear

framework may support the economic growth of

South Africa driven by tourist arrivals and tourist

receipts during 1995 until 2014.

Kum et al., (2015) state that tourist arrival gives

positive impact to GDP. From their research using

DOLS and FMOLS methods, they found that one

percent increase in tourist arrivals stimulates GDP to

raise 0.06 percent as a result of DOLS, and GDP to

raise 0.08 percent as a result of FMOLS.

According to Gramatnikovski et al., (2016),

tourism receipts can have a significantly positive

effect on the growth of the economy. From that

research, the greater the revenues from the

expenditures by international inbound visitors,

including payments to national carriers for

international transport are, the greater the impact they

will have on the country’s GDP.

By looking at the phenomenon, the countries in

ASEAN must increase their GDP which can be

known from the effect of tourist arrival and tourism

receipts. Then, this research is going to examine the

effect of tourism sector on ASEAN countries’ GDP.

Hereafter, the aims of this research are: 1). To

examine the effect of tourist arrivals and tourism

receipts on ASEAN countries’ GDP partially, and 2).

To examine the effect of tourism sectors on GDP of

ASEAN countries simultaneously.

2 LITERATURE REVIEW

According to the Keynesian theory of multiplier, eco-

nomic growth and tourism are related to each other

(Kum et al., 2015). Economic growth can be led by

international tourism through the multiplier. In

inviting the international tourists, the government in

a country will increase the expenditures such as

spending for employment, costs for infrastructure,

and so on. The expenditures can positively affect the

economic cycle because they increase the rate of

consumption and investment. This process is said as

multiplier effect.

There have been some other examinations to test

the effect of tourism industry on some countries’

economic growth. Brida et al., (2009) investigate the

contribution of tourism to economic growth in

Colombia. The result is international tourism can be

a strategic factor for long-run economic growth for

Colombia. Proenca and Soukiazis (2005) also

examine the impact of tourism on income growth of

Portuguese regions. Phiri (2015) for South Africa and

Tosun (1999) for Turkey have also found empirical

support that tourism may affect the economic growth.

This research examines the impact of tourism

sectors on ASEAN countries’ economic growth from

2011 until 2015. Tourism sectors can be measured

into some empirical measures. According to Phiri

(2015), the empirical measurement of tourism can be

used, namely; tourist receipts and number of

international tourist arrivals. Another approach that

examines tourism sectors into receipts from tourism

and international tourist is done by Fayissa et al

(2008). Later, tourism sectors of this research can be

divided into tourist arrivals and tourism receipts.

The effect of tourist arrivals and tourism receipts

on economic growth has been examined by some

previous researches as mentioned below.

2.1 The Effect of Tourist Arrivals to

Economic Growth

Tourist arrivals are captured by the annual arrivals of

international tourists, defined as people who travel to

a country other than that in which they usually reside

(Ivlevs, 2017). The effect of tourist arrivals on

economic growth has been examined by some

previous researches. Tourist arrivals inflate the cost

of housing and retail prices in the area, especially on

seasonal basis (Fawaz and Rahnama, 2014). When

the cost of retail prices and housing getting increase,

it shows that the economic condition in a country is

getting better.

When investments in public sector are rising,

positive externalities which are related to technology

and information will be built because of increasing

tourist arrivals in the long term (Kum et al, 2015).

The Effect of Tourism Sectors on ASEAN Countries’ Economic Growth: Analysis Panel Regression

181

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Those infrastructures arising are happened because of

increasing tourist accommodation that required

financing requirements. The construction of

technology and information infrastructure will make

the growth in economic.

On the other hand, Lucas (1988) explores the

cause of productivity growth may not be explained by

tourist arrivals. The result found that the potential for

productivity growth is less in a sector such as tourism

than it is in manufacturing. Means, the terms of

manufacture effect will be sufficient to outweigh the

impact of lower tourist arrivals in influencing

economic growth. Another research also finds tourist

arrivals can’t be used to explain economic growth

(Lanza et al., 2003).

2.2 The Effect of Tourism Receipts to

Economic Growth

Tourism receipts means expenditure of international

inbound visitors including their payments to national

carriers for international transport, including pre-

payments made for goods or services received in the

destination country (UN-WTO, 2006). Means, the

visit of international tourists to a country may not be

interpreted as tourism receipts as long as they do not

consume. Nevertheless, if they do consumption

activities, it can be interpreted as tourism receipts

because of their consumption actions.

Previous researches have examined the effect of

tourism receipts to economic growth. The result of

Gramatnikovski et al., (2016) shows the correlation

index is determined to 0.8563 which is enough to

claim that there is connection between the

international tourism receipts and GDP in Republic of

Macedonia. The research indicates more so the

greater the revenues from the expenditures by

international inbound visitors, including payments to

national carriers for international transport are the

greater the impact they will have on the country’s

GDP.

Tourism receipts can be used to import capital

goods which then can be used to produce goods and

services and eventually, it leads to economic growth

in the host country (Brida et al., 2014). Another

research also states that GDP can response from

tourism receipts. Aslanturk et al., (2011) found that

GDP responds tourism receipts positively in early

1980’s. Empirical evidence from Fayissa et al.,

(2008) shows evidence of tourism receipts having a

positive contribution to the output and economic

growth of the selected Sub-Saharan African

countries.

3 RESEARCH METHODOLOGY

The population in this research is in the form of

countries registered in The United Nations (UN) from

period 2011-2015. Criteria for sampling can be done

by categorizing the countries in ASEAN during the

research period. The countries, which fit the criteria

based on the research sample are Indonesia,

Philippines, Malaysia, Singapore, Thailand, Brunei,

Vietnam, Laos, Myanmar, and Cambodia.

The dependent variable of this research is GDP in

ASEAN countries while the independent variables

are the tourist arrivals and the tourism receipts from

those ASEAN countries. The period in this research

is from 2011-2015, therefore, the data is in the form

of panel data. The data is in a form of secondary data.

Hence the data can be compiled from The World

Bank’s data.

The research applies panel data regression method

where panel data is a combination of time series and

cross-section. The test with panel regression method

can be done by selecting three role models and they

are: Common Effect Model or Pooled Least Square,

Fixed Effect Model, and Random Effect Model

(Gujarati, 2003).

As a common, a model of panel regression

method can be formulated as follows (Nachrowi and

Usman, 2006):



GDP

= α + β TA

+ β TR

+ ε

(1)

Where:

i = 1, 2, …, N

t = 1, 2, …, T

α = Coefficient of intercept

(Constant)

β = Coefficient of slope

TA = Tourist Arrivals

TR = Tourism Receipts

ε = error term

4 EMPIRICAL RESULTS

Panel regression can be performed by determining 3

main models as follows: Common Effect, Fixed

Effect, and Random Effect (Gujarati, 2003). There

are two ways to determine the most appropriate

model in estimating panel data parameters. Those two

ways are Chow Test and Hausman Test (Gujarati and

Porter, 2013).

According to the Chow Test and Hausman Test of

this research, Fixed effect Model (FEM) is

undertaken for panel data regression. FEM of this

research can be seen in table 1.

ICEBM Untar 2018 - International Conference on Entrepreneurship and Business Management (ICEBM) Untar

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Table 1: Fixed Effect Model Result.

Source: e-Views, data processed 2018

Based on the table 1, the variable of tourist

arrivals (TA) has the p-value 0.8805. It means that the

p-value for TA (0.8805) is greater than the

significance level (0.05) which is TA is not valid in

explaining the economic growth during the research

period. The result is the same like the conclusion of

Lanza et al., (2003). They state that tourism for a

broad cross-section of countries may be correlated

with human capital, geographic or cultural features,

for instance, but may not be an independent

determinant of economic growth.

Oh (2005) also rejects tourism-led economic

growth hypothesis. In his research, Oh applies South

Korea data during period 1975-2001 as a destination

for comparison. The result concludes that

international tourist arrival may not affect South

Korea’s GDP in the long run as long as tourism

facilities are not supported. Lucas (1988) also stated

productivity growth may not be explained by tourist

arrivals because manufacture effect will be more

sufficient in explaining economic growth than

tourism effect.

The variable of tourism receipts (TR) has the p-

value 0.0068 according to table 1. If it is compared to

the significance level in 0.05, it means tourism

receipts variable is valid to explain the economic

growth in ASEAN countries during the research

period. Aslanturk et al., (2011) concluded that GDP

responds tourism receipts positively in early 1980’s.

According to Fayissa et al., (2008), a 10 percent

increase in the tourism receipts of a typical African

economy would result in a 0.3 percent increase in the

average per capita income.

The result of Gramatnikovski et al., (2016)

indicates more so the greater the revenues from the

expenditures by international inbound visitors,

including payments to national carriers for

international transport are, the greater the impact they

will have on the county’s GDP. It means that the

increasing consumption rate of international tourists

can contribute to the amount of GDP in the ASEAN

countries.

From the table 1 can be seen that prob (F-statistic)

is 0.039627 which means smaller than significance

level at 0.05. This means tourist arrivals and tourism

receipts, when considered as tourism sectors or

considered as simultaneously, can explain the change

of GDP in ASEAN countries. From the result of panel

data regression in table 1 can be seen that

determination coefficient (R

) is 0.205582 or 20.6%.

Means, tourism sectors can contribute the change of

GDP in ASEAN countries at 20.6% while the rest is

explained by the other factors in out of research.

5 CONCLUSION AND

IMPLICATION

5.1 Conclusion

The countries in ASEAN could improve their GDP

by raising their revenue from tourism. The increasing

of tourism receipts can stimulate the government in

the ASEAN countries to increase the expenditures

such as spending for employment, costs for

infrastructure and so on. The expenditures happened

can make the economic growth positively. This is in

accordance with the theory of the Keynesian theory

of multiplier. Tourism receipts can make multiplier in

the form of expenditures and finally, in the economic

growth.

The government in the ASEAN countries should

also pay attention that tourist arrivals not necessarily

help the economy in their country. The international

tourist arrivals may not necessarily indicate that they

will have high levels of consumption in the countries

where they visit. The things that must be noticed is

how to increase the level of international tourist

arrivals consumption so that tourism receipts can also

increase, which eventually GDP in ASEAN countries

increase as well.

However, tourism sectors can contribute 20.6%

which is the government in ASEAN countries has to

pay more attention in the development of their

tourism sector. This means that the government in

ASEAN countries can improve their economic

growth performance by strategically harnessing the

contribution of tourism industry.

The Effect of Tourism Sectors on ASEAN Countries’ Economic Growth: Analysis Panel Regression

183

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5.2 Implication

The ASEAN countries should improve their facilities

and infrastructures which could support their tourism

sectors. To increase tourism sectors, the government

in ASEAN countries could do several things, for

instance, providing the cheap integrated

transportation and hotels, having interesting tourism

spots that can be accessed easily and so on. Those

things can stimulate the international tourist not only

visit the ASEAN countries, but also stimulate them to

increase their consumption level when visiting

ASEAN countries.

The economic performance in ASEAN region

during research period 2011-2015 could be affected

by tourism sectors about 20%. Means, the countries

in ASEAN region after entering the MEA era in early

2016 should be able to further increase the

contribution of their tourism sector to the economic

growth. They do not only provide the easy access for

citizens in ASEAN countries to obtain visa freedom

(single visa), but they also have to create tourism

program regularly with the fellow countries in

ASEAN region. For instance, Indonesia and

Myanmar create sister city program for Yogya and

Mandalay where this program can stimulate the

citizen between those two countries to visit one

another.

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