Progress in Policy Promoting Second Tier Cities Tourism: Toward Tourism and Economic Growth
Tourism, both international and domestic tourism, is important for many countries that can generate economic growth including Thailand. Thailand not only promoting international tourism but promoting domestic tourism also. This study investigates total government’s budget allocation for promoting second tier cities tourism destination effects of economic growth and tourism sector in 55 second tier cities tourism destination in Thailand using annual data for period 2012-2018 through FMOLS, DOLS and VECM approach. The results obtained that total domestic tourism income, total domestic tourism expenditure and real Gross Provincial Product are the major drivers for increasing total government’s budget allocation for promoting second tier cities tourism destination whereas number of domestic tourists is major driver for a significant decline in factor total government’s budget allocation for promoting second tier cities tourism destination as well. The results from panel causality test obtained that that government’s budget allocation for promoting tourism direct effect to increases GPP and indirect effects through tourism growth especially increases number of domestic tourists and total domestic tourism income. Thus, currently government policy for second tier cites tourism destination focuses on tourism development and reducing tax burden has significant positive effect on economic growth (real GPP) and tourism indicators as well. The policy implication for government are 1) government should still allocate budget promotes tourism development through infrastructure improvement, 2) government should remain using tax incentive in second tier cities, and 3) government should focus on the environment management and promotion of grater environmental.