The International Tourism Demand for Indonesia: Expenditure Approach
AbstractThis study aims to analyze the determinant of Indonesian tourism demand with the tourist expenditure approach. The data used in this study are from 31 countries with data series 2003 to 2017. The method used in this study is a dynamic panel with the first difference-GMM estimation method. Many studies use standardized tourism price data. In policy, it is also necessary to consider the price of tourism competitors. The use of tourism prices and competitor prices together if standardized with exchange rates can lead to high multicollinearity. So that tourism prices, competitor prices, and exchange rates are used as each variable. This research found that the income of tourists has a positive effect on demand, but it is not large. Relative prices and exchange rates are the biggest determinants of tourism demand. Appreciation of the exchange rate and the increase in prices in Indonesia can reduce the demand for tourism relatively. While competitor prices show a complementary relationship, rising prices in competing countries will also reduce tourism demand in Indonesia. This research suggests to the government to keep competitive prices to increase tourism demand because the tourist budget is prepared at the beginning by tourists but the value of shopping in the destination country depends on the value of the rupiah and the prices of tourism products in Indonesia.
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