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IMPACT OF GOVERNMENT AND TOURIST EXPENDITURE AND

PRIVATE INVESTMENT TOWARDS PERFORMANCE OF BALI ECONOMY:

A SIMULATION OF SOCIAL ACCOUNTING MATRIX APPROACH1)

MADE ANTARA2)

ABSTRACT

Bali is once of the province in Indonesia, and to be the important touristsdestination in the world. Bali's economic development is focused on agriculture, tourism

and industry as the first priority. While other part of the Indonesia economy weresuffering severely due to economic down turn since the middle of 1997, Bali s economy

seems less affected. The performance of Bali's economy was analyzed employing 1996Social Accounting Matrix (SAM), constructed based on 55x55 accounts. It is assumedthis 1996 SAM could represent the present situation of Balis economy.

The impact of increased allocation of expenditures for economic infrastructure,

without increased in total government expenditure, on the performance of Balis economywas relatively low. While increased allocation of expenditure on social infrastructure or

public services without increase in total government expenditure would deterioratesubstantially the performance of Balis economy.

Maintaining the government expenditure for development as in 1996 levels, but

an increase in the expenditure of tourists or private investment, would enhanced the performance of Balis economy. Even a decline in government expenditure could be

compensated by an increase in tourist expenditure or private investment, suggesting thatgovernment expenditure was not the main sources of economic growth.

However, an increase in tourist expenditure without effort to increase the

government expenditure would affect the income distribution amongst household group

towards more inequality. But, an increase tourist expenditure as well as governmentexpenditure would promote better income distribution.

______________________________________1) This Article is part of Dissertation of Doctor at Post Graduate Program, Bogor Agriculture Institute,

Bogor-Indonesia. .2) Author is Lecturer at Agriculture Socioeconomic Department, Faculty of Agriculture, University of

Udayana, Denpasar, and Bali-Indonesia. .

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I. INTRODUCTION

1.1. Back Ground

Aggregately, a country or region economy can be divided into sectors of

agriculture, industries and services. At begin the industrialization, relative contribution of

agriculture sector on economy is very dominant, yet furthermore will decrease till stage

certainty. In the other side ability the agriculture sector to absorb the labor also decrease

which balanced by the role of industries and services sectors. This like phenomenon by

Malassis (1975) called structural transformation Process.

Development in Bali Province stressed at economic field with priority of

agriculture in term wide sector, tourism sector with characterized by Bali culture and

spirited by Hindu religion, and small industry sector or handicraft mainly linkage with

agriculture and tourism sectors. Three sector priority Policy like this, according to

Nurkses terminology, 1953 (see Yotopoulus and Nugent, 1976) can be grouped into

balanced growth model, namely there is linkage supply and demand amongst one sector

with the other sectors, or development of those sectors can create theirs self-demand.

Bali economic growth was spectacular, the average per year in the first, second,

third, forth, and fifth five years development (Pelita I, II, III, IV, V) respectively are 7.32

percent, 8.55 percent, 14.01 percent, 8.40 percent, and 6.30 percent (Anonim, 1994).

Meanwhile the end of three growth of sixth five years development respectively 7.561

percent, 7.31 percent, and 8.16 percent according of 1993 constant price (Anonim, 1997).

Bali economic growth which relative high since first five years development

(Pelita I) till 1996, achieved pass through allocation of investment, second of them are

government (G) and private investment (I) expenditure. Thus, expenditure mentioned to

fund the sector development, that reality aim to stimulus of economy i.e., to promote the

regional economic growth, to generate the people income and to expand the job

opportunity. Pass through various program and project funds source from central and

regional government; the regional government also to build various physical and

economic infrastructures included tourism infrastructures to anticipate rising the tourists

visiting. Increasing the tourists visit will increase tourists expenditure, and finally

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increase the multiplier effects, foreign exchange income, and expanding of job

opportunity.

Clearly, government and tourist expenditure, and private investment have role as

injection of fund into Bali economy. Yet, crisis attack the national (Indonesia) economy

since July 1997 decreased the government return, finally also to decrease ability

(expenditure) the government to fund the economic sectors development. Likewise,

security crisis follow the economic crisis cause the Bali regional government decrease

tourists visit target from 10 percent to be 5 percent, certainly also decrease the tourists

expenditure total target in Bali.

1.2. The Earlier Studies

Arief (1993) shows the weakness of Input-Output (I-O) Method who developed by

Leontief and Hoffenberg to estimate the impact of government expenditure change

toward output and labor absorption in United State. This is not formulated to estimate the

impact of government expenditure change and other macro variables, like factors of

production income, balance of payments and return of tax.

Ratnawati (1996) conducted of study use computable general equilibrium (CGE)

model found that import tariff to increase the Indonesia economy performance indicated

by increase the Real Gross Domestic Product (RGDP). Yet, decreasing the import tariff

really decrease rupiah foreign exchange value to dollar, cause needed more dollars to fund

the import. Decreasing the import tariff to effects decrease of domestic investment cause

most of the capital goods can obtain from foreign.

Wuryantos study (1996) use interregional Social Accounting Matrix found that

decentralization fiscal can increase regional household income in almost all provinces,

mainly in Java. Yet, increasing the outer Java household income at the begin low, tend

appear income inequality compared actual scenario. The other research result namely,

arranging the fiscal of decentralized to produce national output bigger than the other

actual scenario. Meanwhile Budiyanti and Schreiner (1991) applied SAM for 1988

National Data Panel found that SAM useful to analyze sources and distribution income

inter farming system (food and cattle), production zoning, farm labor, and women labor.

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Studies of regional economic use SAM model still relative scarcity. Bali economy

with its tourism characteristic, until now is not never yet approached with SAM model.

While, to know role or impact the tourism sector on Bali economy, Erawan (1994)

suggest use Input-Output (I-O) analysis as long as available the I-O table obtained with

survey method. Yet, need remembered that I-O model usability to explain i.e.: (1)

Institutions income distribution, (2) Impact of tourist expenditure toward production

sectors, and (3) Change impact of tourists and government expenditure on growth and

distribution of income. Meanwhile in SAM construction can be entered tourist institution.

Based on the earlier studies, limited the I-O model only display production sectors

and scarcity prices data, and the other regional data if use computable general equilibrium

model, so using SAM model to study impact on government, tourist, and private

investment expenditure toward Bali economy performance, feasible and urgent to

conduct.

II. METHODOLOGY

2.1. SAM Approach

Social Accounting Matrix (SAM) is a data framework arranged in form matrix

which enclose various socioeconomic variables compactly and integrated so that can

present general picture of economy a country or region in the unity time (King, 1985;

Pyatt and Round, 1985; BPS, 1994). The other using of SAM are multiplier analysis,

income distribution study, simulation of policy impact, input for computable general

equilibrium model, CGE (Thorbecke, 1985).

Base form of Social Accounting Matrix framework is matrix 4 x 4, but each of

these matrix elements consists of submatrix (subsystem or subaccounts). Row represents

revenue/income (incoming), while column shows expenditure (outgoing). In SAM prevail

certainty that total revenue (total row) same the total expenditure (total column). In SAM

framework such as present at Table 1, there are 4 main accounts namely, (1) factors of

production, (2) institutions, (3) production sectors, and (4) other accounts (rest of the

world).

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Column vector, namely values of xi that appear at column 4 represent injections,

assumed determined exogenous. For example flow of transfer or government expenditure

(central or regional), transfer from foreign to the household and firm, investment and

export. Meanwhile row vector (li) in row 4 represent leakage, example direct and indirect

taxes, saving, import, and income transfer to the foreign. Three other accounts (factor,

institution, and production activity) assumed determined endogenous.

Table 1. Simplicity of Social Accounting Matrix Framework

Expenditure

Revenue

Endogenous Accounts Exogenous

Accounts(Injections

)

Total(Revenu

e)Factors ofProductio

n

Institutions

Production Sector

1 2 3 4 5

EndogenousAccounts

Factors ofProduction

1 0 0 T1.3 x1 y1

Institutions

2 T2.1 T2.2 0 x2 y2

ProductionSectors

3 0 T3 T3.3 x3 y3

Exogenous Accounts(Leakage)

4 l1 l2 l3 r yx

T o t a l(Expenditure) 5 y1 y2 Y3 yx

In practical arranging the SAM table, breaking each of accounts depend on

objective of study and data availability. Thus, important diagnose set of accounts near

minimum needed to represent an economy system.

2.2. The Data

This study using the SAM approach, and to construct 1996 Bali SAM, neededsome of secundair data i.e.: 1996 Bali I-O, 1996 national socioeconomic survey

(Susenas), special survey for saving and investment of households 1996, industrial firms

survey, various of government expenditure, tourism data, and etc. The sources of data

namely, Jakarta Statistic Central Bureau, Bali Statistic Bureau, Regional Planning

Bureau, and the other office of regional government Scope.

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2.3. Arranging the SAM Table

1996 Bali SAM arranged consist of 2 factors accounts i.e. labor and capital; 14

institutions accounts namely 1 firm account, 12 government accounts, 1 tourist account;

28 production accounts i.e. 15 accounts related with the agriculture, 1 mining and digging

account, 7 accounts related with processing and small industries, and 5 accounts related

with services; 6 exogenous accounts. Sum of all accounts are 55 or matrix 55 x 55. Using

data, which available, conducted filling, the accounts cells, and furthermore to do

adjustment to attain equilibrium inter row and column. Until this stage, the SAM table

was ability to describe the Bali regional economy.

2.4. Methods of AnalysisSimulation use simultaneous equation namely:

y = Ma x

Where: y is column vector of i-th income accounts (49x1), x is column vector of i-th

injections accounts (49x1), and Ma is accounts multiplier (49x49).

Simulation focused on combination of three exogenous variables namely

government, tourist and private investment expenditure watched theirs impacts toward

growth and income distribution of regional accounts, or Bali economy performance.

Simulation to cover 4 groups and 15 scenarios represents at Table 2.

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Table 2. Simulation Scenarios of Government and Tourist, and Private Investment Based on1996 Bali SAM

Group Scenarios

I

1

Government Expenditure Fixed like 1996, only allocation forEconomic Infrastructure increase to be 15 %

Regional Government Budget (APBD)

Economic Infrastructure 37% (+15%) 52%Social Infrastructure 22% .. 17%General Services 41% 31%

Central Government Budget (APBN)

Economic Infrastructure 66% (+15%) 81%Social Infrastructure 30 % . 17%General Services 4 % .. 2%

Tourist Expenditure Constant like 1996(Growth Nuance Scenario)

2

Government Expenditure Constant like 1996, only allocation for

Social Infrastructure increase to be 15 %Regional Government Budget (APBD)Economic Infrastructure 37% .. 32%Social Infrastructure 22% (+15 %) 37%General Services 41% .. 31%


Economic Infrastructure 66% 53%Social Infrastructure 32% (+15 %) 47%

General Services 4% .. 2%

Tourist Expenditure Constant like 1996(Equity Nuance Scenario)

3

Government Expenditure Constant like 1996, only allocation for

General Services 15 %Regional Government Budget (APBD)Economic Infrastructure 37% .. 27%Social Infrastructure 22% .. 17%General Services 41% (+15 %) 56%


Economic Infrastructure 66% . 56%Social Infrastructure 32% .. 25%General Services 4% (+15 %) 19%

Tourist Expenditure Constant like 1996(Equity Nuance Scenario)

II

4 Government Expenditure Constant like 1996

Tourist Expenditure Increase 5%5 Government Expenditure Constant like 1996

Tourist Expenditure Increase 10%

6 Government Expenditure Constant like 1996

Private Investment Increase 15%

7 Government Expenditure Decrease 15% Tourist Expenditure Constant like 1996

8 Government Expenditure Decrease 15 %

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III a

b

Tourist Expenditure Increase 5 %

9 Government Expenditure Decrease 15 % Private Investment Increase 10%


Tourist Expenditure Constant like 1996


Tourist Expenditure Increase 5 %

12 Government Expenditure Decrease 30 % Private Investment Increase 15 %

IV

13 Government Expenditure Increase 15% Tourist Expenditure Constant like 1996

14 Government Expenditure Increase 15 % Tourist Expenditure Increase 5%

15 Government Expenditure Increase 15 %

Tourist Expenditure Increase 10 %Note:1. The size of the other variables outer scenarios assumed constant like 1996.2. Accounting the tourist expenditure for simulation used some assumption:a) Length of stays of tourists same like 1996 namely, 9.20 days for foreign tourist and 5.0 days for

domestic tourist.b) Tourist expenditure per person per day same like 1996 i.e. $ 83.92 for foreign tourist and $ 27.88

for domestic tourist.c) To use realistic and moderate exchange rate Rp 5000/$, while exchange rate in 1996 or before

monetary crisis is Rp 2400/$.3. Tourist expenditure constant like 1996 are Rp 8.128.228 million, equal with tourist visiting constant

like 1996 as much as 3,374,226 person (1,826,054 person foreign tourist and 1,548,172 persondomestic tourist).

4. Tourist expenditure increase 5% are as much as Rp 8.534.640,094 million, equal with increasing oftourist visiting 5% are as much as 3,542,936 person (1,917,357 person foreign tourist and 1,625,581person domestic tourist).

5. Tourist expenditure increase 10% are as big as Rp 8.941.051,527 million, equal with increasing thetourist visiting 10% are as much as 3,711,649 person (2,008,659 person foreign tourist and 1,702,989person domestic tourist).

6. Tourist expenditure = sum of tourist visit x average of tourist expenditure per person per day x averageof tourist stay length.

7. Private investment increase 10% compared 1996 investment total are as big as Rp 2.539.911,00million, and increase 15% are as big as Rp 2.655.361,5 million.

8. Result of simulation compared with at first condition (1996) with use exchange rate Rp 5000/$. Thisexchange rate is assumed realistic in the Indonesia economy which stabile and desired by authority ofmonetary.

9. Scenarios Group I, II, and III (No. 1-12) represent economy crisis, while scenarios Group IV (no. 12-15) represent of economy recovery.

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III. RESULT AND DISCUSSION

A multiplier analysis, however, only can catch the effects of exogenous variable in

meaning relative. In order to catch in term absolute (real), simulations represent condition

mentioned and must be conducted.

3.1. Group I: Government and Tourist Expenditure Constant, only Allocation of

Expenditure for Infrastructure or General Services Change

Increasing the allocation for economic infrastructure 15 percent (S1) without

increase government expenditure total, surely is growth nuance, has impact to grow Bali

economy 1) only 0.05 percent, household income of average 0.05 percent, production

sector of average 0.09 percent, and specially for agriculture production sector 0.10

percent (Appendix 1). This impact relative small cause the multiplier effects of economic

infrastructure have not role that limited by constant government expenditure total. Yet,

there are two sectors i.e. mining/digging and construction/building growth current 1.0

percent. This mean both of those sectors obtain biggest beneficiary from increasing the

allocation of economic infrastructure, pass through the growth of output demands both of

sectors mentioned.

Increasing of allocation for social infrastructure 15 percent (S2) or generalservices 15 percent (S3) without increase the government expenditure total, surely is

equity nuance. Simulation results indicate that both of these scenarios have excess

decrease Bali economy performance, decrease the value-added growth of production

factors, household income, as well as income of production sectors. Some sectors

which decrease relative

high i.e. mining/digging each 0.38 percent and 1.40 percent, building/construction

each 0.47 percent and 1.73 percent. Yet increasing the allocation of social

infrastructure

1) Growth of Bali economy meant is economy growth from income side namely, average of income growth(value added) of labor and capital production factors (Gross Regional Domestic Product at factorcost).

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Lower decrease the economy performance than increasing the allocation of general

services (Appendix 1). This caused by social infrastructure multiplier effects generally

relative bigger than general services, so that more ability defends decreasing the economy

performance.

3.2. Group II: Government Expenditure Constant, Tourist and Private

Investment Expenditure Increase

If government expenditure is constant like 1996 and tourist expenditure increase 5

percent (S4), will grow the Bali economy (Average of value added) 2.66 percent. While if

tourist expenditure increase 10 percent (S5), will grow the Bali economy 5.32 percent

based on 1996 factor price. Yet, if private investment increases 15 percent (S6) will grow

the Bali economy 1.51 percent (Appendix 2). Thus, although government expenditure for

development is not increase, but if tourist expenditure in term tourist visits increase or

private investment increasing, so Bali economy positive grows. Yet, impact of private

investment 15 percent relative lower than impact expenditure increasing 5 percent.

The production factors owner by household, so that its income must divided

amongst the household groups. S4, S5, and S6 have impacts2)

to grow the households

income each 2.644 percent, 5.29 percent and 1.49 percent. At Appendix 2 so appear that

more and more increase the tourist expenditure or visit (S4 and S5), so distribution ofincome amongst household groups have been less equality. This indicated by standard of

deviation (SD) or coefficient of variation (CV) more and bigger each SD is 0.0055 for S4

have been 0.0152 for S5, and KV is 0.21 percent for S4 have been 0.29 for S5.

S4, S5, and S6 also promote the growth of production sector income, respectively 2.22

percent, 4.44 percent, and 2.06 percent. Yet, the growth of agriculture production sector

(in wide meaning) relative higher at S4 and S5 each 2.25 percent and 4.49 percent, but

relative lower at S6 namely 1.05 percent than average of the production sector growth at

each scenario.

2) Term of impact used for scenarios appear positive growth, while term of excess used for scenariosnegative growth

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Group III: Government Expenditure Decrease, but Tourist and Private

Investment Expenditure Increase

Groups of scenarios III also represent the economy of crisis, signed by decreasing

the government expenditure for development, assumed decrease 15 percent and 30

percent. Yet tourist expenditure in Bali assumed decrease from optimistic target (10%)

namely, constant like 1996 and increase 5 percent. Third of government, tourist, and

private investment variable have the same impact toward Bali economy. Hence essence of

these scenarios is to watch ability of increasing the tourist and private investment

expenditure compensates the decreasing the government expenditure and its impact

toward performance of Bali economy.

1. Government Expenditure Decrease 15 Percent, but Tourist ExpenditureIncrease 5 Percent and Private Investment Increase 10 Percent

If government expenditure decrease 15 percent and tourist expenditure constant

like 1996 (S7), so has excess to decrease the growth of Bali economy, -0.40 percent

(Appendix 3). This increasing caused by decreasing the demand of production sectors

output by government, and then to decrease its productivity, finally to decrease the value

added of production factors. Yet, if government expenditure decreases 15 percent, but

tourists expenditure increases 5 percent (S8), so has impact to grow of Bali economy2.24 percent. This positive growth caused by increasing the demand of production sectors

output by tourist more than decreasing the demand of output by government, so it net

impact is positive, and finally able to increase the value added of production factors used

in production process. Meanwhile, if government expenditure decrease 15 percent, but

private investment increase 10 percent (S9), so the Bali economy able to grow 0.60

percent.

Excesss S7 continuos until at institution accounts, namely to decrease the

household income (accounts 3-7) average 0.41 percent. Yet, if tourist expenditure

increase 5 percent (S8) or private investment increase 10 percent (S9), the household

income to grow each 2.24 percent and 0.59 percent. Thus, decreasing the household

income can be restrained although occur decreasing the government expenditure 15

percent of accompanied with increasing the tourist expenditure or private investment.

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S7 also has excess to decrease production sectors income0.77 percent. If excess

S7 traced furthermore, from main three sectors, generally the income of industries sectors

included construction/building and mining/digging decrease the highest, the followed by

agriculture and the end the services sectors. At S8 the income of production sector to

grow 1.49 percent. While agriculture sector to grow (in wide meaning) to grow higher

1.80 percent. This indicated that agriculture sector linkage with tourism. At S9 the

income of production sector able to grow 1.04 percent, so that decreasing the government

increasing the private investment 1 percent can compensate expenditure 15 percent. This

indicate that decreasing the growth of production sectors cause decreasing the

government expenditure can be restrained if at the same time there is increasing the

private investment 10 percent.

Generally, if government expenditure decreases 15 percent, but tourist

expenditure constant like 1996 (S7) has impact decrease the performance of Bali

economy. Meanwhile if government expenditure decrease 15 percent, but tourist

expenditure increase 5 percent (S8), or private investment increases 10 percent have

impact increase the performance of Bali economy. Thus government expenditure is not

once sources of growth, cause still there is else namely tourist expenditure or private

investment as growth engine of Bali economy.

To link result of simulation S7 with S8 and S9, appears that excess of decreasing

the government expenditure 15 percent can be compensated by impact of increasing the

government expenditure 5 percent of private investment 10 percent.

2. Government Expenditure Decrease 30 Percent, Tourist Expenditure ConstantLike 1996 and Increase 5 Percent, but Private Investment Increase 15 Percent

If government expenditure decreases 30 percent, but tourist expenditure constant

like 1996 (S10), Bali economy will grow 0.81 percent (Appendix 4). This decreasing

still relative low and not yet worry compared with Indonesia economy which construction

12.23 percent at first semester 1998 (see Kompas News, Wednesday 8, July 1998:

Economy of Indonesia minus 13.06 percent). Yet, if tourist expenditure increases 5

percent (S11), so Bali economy will grow positive 1.85 percent according to the 1996

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factors prices. While if private investment increase 15 percent (S12), so the Bali economy

also grow positive namely 0.71 percent.

If government expenditure decreases 30 percent, but tourist expenditure constant

like 1996 (S10), has excess to decrease the growth of production sectors 0.45 percent

(Appendix 4). Yet if government expenditure decreases 30 percent but tourist expenditure

increases 5 percent (S11), so production sector will grow 0.77 percent. From three main

sectors, services sectors group to grow highest, then followed by agriculture sector group,

and industries sectors group will grow lowest. If government expenditure decreases 30

percent but private investment increase 15 percent (S12), so the production sector will

grow 1.62 percent.

Pay close attention to the growth of factors income (growth of Gross Regional

Domestic Product based on 1996 factors prices), household income, and production

sectors income, so S10 has excess to decrease the performance of Bali economy, while

S11 and S12 have impact to increase the performance of Bali economy. To link S10 with

S11 and S12, so excess of decrease the government expenditure 30 percent can be

compensated by impact of increase the tourist expenditure 5 percent (pessimistic target),

or by impact of increase the private investment 15 percent. Thus tourist and private

investment in Bali have important role as growth engine of Bali economy in condition of

government expenditure decrease.

3.4. Group IV: Government and Tourist Expenditure Increase

If government expenditure increases 15 percent and tourist expenditure constant

like 1996 (S13), increase 5 percent (S14) and 10 percent (S15), will grow the Bali

economy respectively 0.40 percent, 3.06 percent, and 5.70 percent according to the 1996

factors prices (Appendix 5).

S13 also has impact to increase the household income average 0.41 percent.

Amongst five groups, the first household group achieves biggest impact, namely the

growth 0.45 percent (Appendix 5). This sign that increasing the government expenditure

is equity nuance, its mean increasing the government relatively will increase the income

of lower income households group. If government expenditure increases 15 percent and

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tourist expenditure increase 5 percent (S14) and 10 percent (S15), so household income

will grow 3.06 percent and 5.70 percent. To compare the distribution of income growth

amongst S13, S14, and S15 use standard deviation (SD) or coefficient of variation (CV)

criteria, so SD and CV more and more little. Where for SD respectively 0.0245 0.0207;

and 0.0179, or for CV respectively 5.98 percent, 0.68 percent, and 0.31 percent. This

indicate that if increasing the tourist expenditure accompanied by increasing the

government expenditure, so will promote the better income distribution amongst

households in Bali.

S13, S14, and S14 have impact to grow the production sectors income

respectively 0.72 percent, 2.95 percent, and 5.17 percent. If this impact checked per

sector, generally the growth rate of services sectors (accounts 33-36) and agriculture

sector (accounts 9-16) increase coincides with increasing the tourist expenditure.

To observe the impact of S13, S14, and S14 toward factors accounts, households

accounts, and production sectors accounts, so government and tourist expenditure have

impact of increase the performance of Bali economy.

IV. CONCLUSION AND POLICY IMPLICATION

4.1. ConclusionThe impact of increased allocation of expenditure for economic infrastructure

without increased in total government expenditure, on the performance of Balis economy

was relatively low; while increased allocation of expenditure on social infrastructure of

public services without increase in total government expenditure would deteriorate

substantially the performance of Balis economy.

Maintaining the government expenditure for development constant like 1996

while tourist expenditure or private investment increase would improve the performance

of Balis economy. Thus, tourist expenditure or private investment has important role to

increase the performance of Bali economy.

A decrease in government expenditure could be compensated by an increase in

tourist expenditure or private investment expenditure increase. Meaning that government

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expenditure was not the only source of economic growth. Thus, tourist sector and private

investment could serve as an engine of growth for Balis economy.

An increase in tourist expenditure without accompanied by an increase in

government expenditure would cause the distribution of income amongst groups of

household moved toward more inequality. While an increasing in tourist expenditure

together with government expenditure would promote relatively better distribution of

income amongst the groups of household. This indicated that government plays

significant roles to improve the income of the poor though IDT program, in particular.

An increase in the government and tourist expenditure simultaneously would

promote the performance of Balis economy, and economic growth as well. . Thus appear

there is synergy between government expenditure and tourist expenditure in promoted the

growth of Bali economy and equality of its results.

4.2. Policy ImplicationGovernment expenditure (included expenditure of economic infrastructure) should

be increased as to promote better distribution of income and tourism sector. This could be

implemented by: (1) provision of physical and economic infrastructure including

transportation, communication, and information, (2) removal of security problems to

provide more convenience and comfort to tourist visiting Bali, and (3) better promotion

of Bali tourism.

Bali tourism should be maintained and developed, taking into properly the

physical carrying capacity of the province. Since tourist expenditure is one main fund

injections to Bali economic development, then, the government (central and local) and

private tourist agents should cooperate to formulate policy to promote tourism in

Indonesia, Bali in particularly.

In the attempt to promote flows of private investment to Bali, local government

should provide conducive investment and business climate by: (1) provision at facility

and investment information, (2) facilitation of issuance of investment permits, and (3)

guaranteeing security for investor, (4) provide the good infrastructure, and so on. To

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promote better distribution of income, the local government should direct the spread of

investment out of Badung and Denpasar districts.

The development strategy of Balis economy should continue to focus on tourism

(including linkages between services and tourism), agriculture and small-

industries/handicraft. This strategy has proven to be successful to prevent Bali economy

from serious difficulties, when the national or Indonesia economy in the severe recession.

4.3. Recommendation of Research

Tourism in Bali is clear appearing the positive multiplier effect toward Bali

economy. Yet, must be recognized that tourism appeared negative externality. In this

relation, research with use environment SAM needs to conduct, so that knew the net

impact of tourism in Bali economy.

This study also recommends further study based on district SAM (interregional

SAM) in order to assess the effects of rapid tourist development in three districts i.e.

Badung, Kodya Denpasar and Gianyar on other districts. SAM incorporating

environmental dimension (environmental SAM) would also be useful because tourism

also bring about negative externalities beside beneficial effects.

In depth study on physical carrying capacity of Bali Island as relates to tourism

also very important. Tourism may effect the physical carrying capacity, leading to

deterioration of natural resources quality, which finally would destroy tourism it self, or

in the other word tourism destroy tourism.

Limited and disparity of Balis natural resources allocation especially land and

water, also need a study on optimal resources allocation, employing static or dynamic

programming models.

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BPS. 1994. 'Sistem Neraca Sosial Ekonomi Indonesia 1990, Jilid I dan II'. Biro Pusat

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Appendix 1. Impact of Government Expenditure Allocation Change for Infrastructure and GeneralServices Toward Growth and Income Distribution of 1996 Bali Regional Accounts

No Accounts S1%

S2%

S3%

1

2

Factors of Production:

Labor

CapitalAverage of Growth (12)

0,05

0,050,05

-0,03

-0,03-0,03

-0,05

-0,06-0,055

34567

Household (Groups of Expenditure):

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Appendix 2. Impact of Government Expenditure Constant like 1996, but Tourist Expenditure Increase 5% and10%, or Private Investment Increase 15% Toward Growth and Income Distribution of 1996 BaliAccounts

No Accounts S4%

S5%

S6%

1

2


Labor

CapitalAverage of Growth (12)

2,64

2,682,66

5,27

5,365,32

1,76

1,261,51

34567


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Appendix 3. Impact of Government Expenditure Decrease 15%, but Tourist Expenditure Constant like 1996And Increase 5%, or Private Investment Increase 10% Toward Growth and Income DistributionOf 1996 Bali Regional Accounts

No Accounts S7%

S8%

S9%

12


LaborCapitalAverage of Growth (12)

-0,46-0,34-0,40

2,172,342,25

0,710,500,60

34567


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Appendix 4. Impact of Government Expenditure Decrease 30%, but Tourist Expenditure ConstantLike 1996 and Increase 5%, or Private Investment Increase 15% Toward Growth andIncome Distribution of 1996 Bali Regional Accounts

No Accounts S10%

S11%

S12%

12



-0,92-0,68-0,80

1,712,001,85

0,840,580,71

34567


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Appendix 5. Impact of Government Expenditure Increase 15% and Tourist Expenditure ConstantLike 1996, Increase 5% and 10% Toward Growth and Income Distribution of 1996Bali Regional Accounts

No Accounts S13%

S14%

S15%

12



0,460,340,40

3,103,023,06

5,745,705,72

34567


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