FDI in Tourism Sector and Economic Growth in Sumatra Utara


  • Parhimpunan Simatupang Swiss German University
  • Abdul Razak Chik Universiti Utara Malaysia




economic growth, FDI, tourist attraction, tourism


Globalization and neo liberal policies such as liberalization and privatization have generated a significant growth for FDI and considered an important source for capital and foreign currency, capable of spurring economic growth in developing countries. One sector that received particular attention, due to its significant contributions towards economic development, especially in Indonesia, is tourism. Tourism investments in Indonesia are mainly focused on the development of fully-integrated resort sites that help boost the construction of tourist facilities such as hotels and the development of the surrounding environment through social and cultural aspects. The total contribution of travel and tourism to GDP was IDR736.3 billion or 8.9% of GDP in 2012. Foreign direct tourism investments grew by 210% between 2011 and 2012, or at an annual compound average growth rate of 38% between 2006 and 2012. While the implications are at national level, not much could be gathered on the local perspectives. This paper intends to explore the implication of FDI in tourism sector towards economic growth in one of tourism attraction provinces in Indonesia—Sumatra Utara. Specifically, which economic factors contributed towards FDI inflows and their impacts on economic growth in Sumatra Utara.


Plum Analytics

Author Biographies

Parhimpunan Simatupang, Swiss German University

Business Administration and Humanities Faculty

Abdul Razak Chik, Universiti Utara Malaysia

School of Economics, Finance & Banking


Bertschek, I. (1995). Product and process innovation as a response to increasing imports and foreign direct investment. Journal of Industrial Economics 43(4), 341–357.

BKPM (Indonesia Investment Coordinating Board). (2013). Tourism Investments.

Chen, X. (2010). The Influence of FDI on China’s Tourism Industry. Unpublished Master of Business Thesis. Auckland University of Technology.

Endo, K. (2006). Foreign direct investment in tourism—flows and volumes. Tourism Management, 27(4), 600–614.

International Monetary Fund. (2012). IMF World Economic Outlook Database.

Kementrian Pariwisata dan Ekonomi Kreatif. (2014). Tourism Sector Investment Realization in Indonesia Year 2010 – 2014 (Q1).

Kyrkilis, D., & Pantelidis, P. (2003). Macroeconomic determinants of outward foreign direct investment. International Journal of Social Economics, 30(7), 827–836.

Lofts, C., & Loundes, J. (2000), Foreign ownership, foreign competition and innovation in Australian enterprises. Melbourne Institute Working Paper No. 20/00. University of Melbourne

Sadleir, C. (2007). Australia’s policy approach to Foreign Direct Investment 1968-2004 as a case study in globalization, national public policy and public administration. Thesis Doctor of Philosophy. University of Canberra.

Samimi, A. J., Sadeghi, S., & Sadeghi, S. (2013). The relationship between foreign direct investment and tourism development: Evidence from developing countries. Institutions and Economies, 5(2), 59–68.

Scherer, F. M., & Huh, K. (1992). R&D reactions to high-technology import competition. Review of Economics and Statistics, 74(2), 202–212.

Selvanathan, S., Selvanathan, E. A., & Viswanathan, B. (2012) Causality between Foreign Direct Investment and Tourism: Empirical evidence from India. Tourism Analysis, 17(1), 91–98.

Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65–94.

UNCTAD (2007). FDI and Tourism: The Development Dimension-Selected Developing Country Case-studies. United Nations, New York, NY.

UNCTAD. (2008). FDI in Tourism: The Development Dimension-UNCTAD Current Studies on FDI and Development No. 4. United Nations, Geneva.

Veugelers, R., H.P., & Houte, V. (1990). Domestic R&D in the presence of multinational enterprises. International Journal of Industrial Organization, 8(1), 1–15.

Xu, G. (1999). Tourism and local economic development in China: Case studies of Gruilin, Suzhou and Bedaihe. Survey UK: Curzon. P20

Zhang, J., Madsen, B., & Jensen-Butler., C. (2007). The regional impact of tourism: The case of Denmark. Regional Studies, 41(6), 839–853.

Zimmermann, K. F. (1987). Trade and dynamic efficiency. Kyklos, 40(1), 73–87.



Abstract 470  .
PDF downloaded 222  .