THE EFFECT OF DUTCH DISEASE VS NEW PARADIGM OF TOURISM DEVELOPMENT (Case Study of Changes in Bali's Economic Structure)

This article aims to explain the possible effects of Dutch Disease (DD) on tourism development in Bali and how the new paradigm of tourism development can counter the DD effect. As is known, the development of this sector has made tourism a leading industry for Bali's economic growth. However, this condition in the long term is a sign that Bali is starting to experience a significant DD effect, where growth in critical sectors hampers growth in other industries and may even slow down the overall growth rate of the regional economy. Using descriptive analysis techniques, this article utilizes data sharing on agricultural sector growth and labour profile by sector in the Province of Bali to describe how the possible effects of the Dutch disease on the Bali economy occurred.


A. INTRODUCTION
The agricultural sector still dominated Bali's economic development thirty years ago, precisely in the mid-1980s.The sector is growing, accounting for over 40% of Bali's food production and almost one-third of the Bali Province's RGDP.However, the results of research by Jayasuriya and Nehen (1989) have shown that tourism had had a positive effect on the Bali economy, but it was still below the agricultural sector.The farm industry dominated Bali's economic development thirty years ago, in the mid-1980s.The sector is growing, accounting for over 40% of Bali's food production and almost one-third of the Bali Province's RGDP.However, the results of research by Jayasuriya and Nehen (1989) have shown that tourism had had a positive effect on the Bali economy, but it was still below the agricultural sector.
However, this seems to have changed in the next three decades.By the end of the 21st century, the tourism industry had grown dramatically to become large and diverse, even following international standards.Entering the 1990s, the share of the service sector in Bali's economic structure has reached more than 50%.The changes that have occurred in the tourism sector in Bali are significant in shaping the pattern of differences in the structure of Bali's economy, which has shifted from direct agriculture to services.The structural changes in Bali's economy are generally different from those in Indonesia, where the industrial sector's share is more dominant than the service sector.In Indonesia, entering 2000, the industrial sector had a share of 46% and continued to increase to 50% in 2018.
According to the UN-WTO (in Suryadana, 2013: 84), tourism has become a large industry and shows consistent growth yearly.A more concrete contribution of tourism to human welfare can be seen from the implications of tourist movements, such as increased economic activities, understanding of different cultures, and utilization of Tourism can no longer be underestimated.The sector has penetrated almost every corner of the economy, primarily through the labour market, attracting workers from all over Bali.Accommodation and tourism services have spread and developed rapidly in the coastal areas of Kuta and Nusa Dua, Ubud, and surrounding areas.Bali tourism services accommodate a diverse consumer population.Among them: high-end tourists will usually choose to be in Nusa Dua and its surrounding locations, artistic tastes in Ubud and its surroundings; backpackers and tourists with student status will choose to be in Kuta; and domestic tourists along the north coast of Bali (Chevalier, 2017in Suryahadi, 2018).All signs are that Bali is starting to experience significant Dutch Disease effects where growth in critical sectors is hampering growth in other industries and may even slow down the overall growth rate of the regional economy.Many worry that the short-term boom may not translate into long-term economic transformation and a steady increase in living standards among Balinese people.
This article tries to show how the likely DD effect on tourism development in Bali will occur, but it will not discuss further how the DD effect affects the Bali economy more broadly.This information will also be reviewed to determine how the new tourism development paradigm can counter the DD effect.

B. LITERATURE REVIEW 1. Ontology, Epistemology, and Axiology Aspects of Tourism Science
In his book Sociology of Tourism: Tourism Studies in Integrative-Transformative Tourism Towards Spiritual Tourism, Suryadana (2013) said that tourism science is an independent field of science and has fulfilled three scientific paradigm elements.The three elements in question are ontology, epistemology, and axiology.
Tourism science, in the ontological aspect, can be seen from the ability of this science to provide complete information about the nature of tourist travel, tourism symptoms, tourist characteristics, tourist infrastructure and facilities, places and attractions of the destinations visited, systems and organizations, and related business activities, as well as supporting components in the area of origin or a tourist destination.
In the epistemological aspect, according to Suryadana (2013), tourism science can be shown in how tourism obtains scientific truth.The object of tourism science is based on rational thinking logic and can be tested empirically.Obtaining scientific truth can be done through several approaches: (i) a systems approach, (ii) an institutional approach, (iii) a product approach, (iv) methods used to search for scientific truth in tourism science such as exploratory, quantitative, qualitative methods, comparative, exploratory, descriptive studies and other methods that are following the problem and research objectives.
Meanwhile, from the axiological aspect, tourism science can benefit humanity's welfare.Travel and tourist movement is an essential human activity that meets the diverse needs of life in the form of experience, enlightenment, physical and psychological refreshment, and self-actualization (Suryadana, 2013).

New Paradigm of Tourism Development
As an economic engine in foreign exchange investment, the development of the tourism sector has always received attention from various circles, especially the Government.In developing a new paradigm, tourism is not only stated to have an economic role, but it has a fundamental spectrum in a country's broader development.
Nirwandar (2011) explained that tourism development is aimed at, among other things: a. Unity and Unity of the Nation.Tourism can provide a feeling of pride and love for the Unitary State of the Republic of Indonesia through tourist travel activities carried out by its residents throughout the country.Thus, there will be a sense of brotherhood and understanding of the system and philosophy of the life of the people visited, increasing the feeling of unity and national unity.b.Poverty Alleviation.Tourism development should be able to provide opportunities for all Indonesian people to try and work, thereby providing benefits for improving people's welfare.Thus, tourism can significantly contribute to eliminating poverty in various areas and other economic potentials besides the natural and cultural potential for the benefit of tourism.c.Sustainable Development.With the nature of tourism activities that offer natural beauty, cultural richness, and hospitality services, very few resources are used to support these activities.Even based on various examples of good tourism management, the condition of the natural environment and people in a tourist destination has increased significantly due to tourism development in the region.d.Culture Preservation.Tourism development should be able to make a real contribution to efforts to preserve the culture of a country or region, including the protection, development, and utilization of the culture of the country or region.UNESCO and the UN-WTO, in their joint resolution in 2002, stated that tourism activities are the primary tool for cultural preservation.e. Fulfilment of Living Needs and Human Rights.Tourism today has become a basic need for modern society.In some community groups, travelling has even been associated with human rights, primarily through the provision of longer vacation times and paid holiday schemes.f.Economic and Industrial Improvement.Good and sustainable tourism management should provide opportunities for economic growth in a tourism destination.The use of local materials and products in the tourism sector service process will also provide opportunities for local industries to play a role in providing goods and services.g.Technology Development.With the increasing complexity and high competition in bringing tourists to a destination, the need for high technology, especially industrial technology, will encourage tourism destinations to develop their ability to apply the latest technology.Advanced and appropriate technology will be designed to support other economic activities in these areas.

Effects of Dutch Diseases
Dutch Disease (DD) in economics implies a real relationship between an increase in the exploitation of natural resources and a decline in the manufacturing (or agriculture) sector.The mechanism is that an increase in revenues from natural resources (or the influx of foreign aid) will make the given country's currency stronger than that of other countries, making the share of other exports more expensive for other countries to buy, thus making the manufacturing sector less competitive.
According to Krugman (1987), The term DD was coined in 1977 by The Economist to describe the decline of the manufacturing sector in the Netherlands after the discovery of a large natural gas field in 1959.
The classical economic model explains that DD was developed by economists W. Max and J Peter Neary in 1982.In this model, there are non-tradable sectors (which include services) and tradable sectors: booming and lagging (or non-booming) sectors.The booming industry usually involves extracting natural resources, such as oil, natural gas, gold, and other minerals, or producing crops such as coffee and cocoa.The lagging sectors are usually manufacturing and agriculture.

Data and Some Facts
DD effects can vary significantly across different countries, depending on which sectors are affected and which countries are involved.The following are some research results regarding DD effects in several countries.
-Country: Spanyol -Analytical tools: analisis deskriptif --The study aims to offer evidence that the two Spanish regions with the most specialized tourism economies, the Balearic Islands and the Canary Islands, both show signs of a phenomenon described in the economic literature as DD.The tourism boom that occurred in the early 1960s led to a considerable increase in wealth, thanks to the new recreational uses discovered for the coastal natural resources of the two islands.Greater focus is only given to the tourism sector and non-tradeable commodities (services and construction), while industry and agriculture are highly marginalized.Although the income of the population has increased considerably as a result of this shift in production, some doubts have been cast on the feasibility of maintaining this growth rate in the long term, not only because of the depletion of natural resources but also because the specialization of tourism has brought low levels of education and training, innovation and technological advancement.
The development of tourism in Bali, as shown in Figure 1 (one), is also suspected to have a DD effect on the long-term economy of Bali Province.Several data can be used to show how Bali's economy tends to experience the DD effect.Among them are (i) data on land use by use and percentage of land use growth (Figure 3 and Figure 4) and (ii) employment absorption by sector in the Province of Bali, shown in Figure 5.

C. METHODOLOGY
The analysis in this article uses a quantitative and qualitative approach to obtain a comprehensive discussion.Several data and figures are discussed descriptively to get the correct information about tourism development, especially in the conditions of changes in the economic structure of Bali.Literature studies are also used to enrich the analysis of qualitative discussions.

Dutch Disease Effect on the Tourism Economy
With the arrival of tourism, new uses for natural resources were discovered, and increased wealth for indigenous peoples led to an increase in GDP per capita.At the same time, tourism growth changes relative prices, with direct and indirect effects on the production structure of the economy (Javier Capo et al., 2007).
The immediate impact concerns resource allocation.In the tourism sector, the tourist boom increases marginal labour productivity, increases labour demand, and, assuming no unemployment, increases wages.Therefore, the direct impact is the labour movement from the tradable and non-tradable goods sectors to the tourism industry, resulting in a decline in production for the first two sectors.
At the same time, the explosion also had an indirect effect by increasing the population's real income and, as a result, an increase in domestic demand.Greater spending on non-tradable commodities leads to a rise in their relative prices.This, in turn, results in greater incentives to produce non-tradable commodities, whose demand is higher and can only be met through increased domestic output, counteracting the decline in production that occurs as a direct result.The movement of labour into nontradable commodity sectors is only possible if workers leave the tradable sector, whose demand is increasing, motivated by the effects of income, and must be met through an increase in imports (with a consequent decrease in domestic production).
Labour movements and internal demand pressures increase the price of nontradable commodities.As the cost of a tradable commodity is determined internationally by the world market, the real exchange rate rises, reducing the competitiveness of the tradable sector and causing its net exports to shrink.
This process, which runs in parallel with the growth of the export sector linked to local natural resources (i.e. the tourism industry), initially culminates in a decline in the production of tradable commodities, followed by a possible increase of non-tradable output.Commodities, services, and construction jobs if income has an effect more than compensating for the decline in production through the general reallocation of resources.Figure 2. Summarizing the process.

Structural Changes in Bali's Agricultural Sector
Although Bali's tourism experienced a severe shock during the Bali Bombing period (2002 and 2005), the Balinese workforce was reluctant to return to agriculture.Most choose to continue working in the tourism sector, and some turn to (often related) trade and other services.Better education compared to their older relatives and limited opportunities to do business in the countryside led to a lack of interest among young Balinese in returning to the village to farm.
The reduction of agricultural land as a result of the conversion of agricultural land is also the cause of the decrease in the number of workers in the agricultural sector in Bali.The negative impact of agriculture, which turns agricultural productive land into a means of tourism accommodation, certainly reduces opportunities for workers/farm labourers to be fruitful in producing agricultural commodities.Therefore, these workers/labourers must change their course and look for workers in other fields outside of agriculture (Dewi and Sarjana, 2015).
On the other hand, Indonesia's economic recovery after the 1997/1998 financial crisis brought an increasingly attractive property business to Bali in the 2000s.The increasing growth of Bali's population through migration and the number of Jakartabased entrepreneurs coming to Balieither to seriously develop their business or to buy a house or land in Bali as an asset for "prestige", thus causing the property business to flourish in Bali.These factors have implications for a considerable decrease in land area for rice farming.For example, in 1998-2007, the decline in paddy fields reached 7% or an average decline of more than 0.7% per year, while non-agricultural land grew to 0.1% per year (Figure 3)., 1988-2007 and 2008-2016 As already mentioned, agriculture, especially rice farming, is essential for social life in Bali, and the type of tourism that the Balinese Government wants to support is cultural tourism, which is sourced from social and cultural life.So Bali needs to support agriculture so that the industry can continue to play an essential role in cultural tourism.Therefore, during the next period, 2008-2016, the Balinese Government issued various policies to reduce land conversion.The Government issued multiple policies to prohibit the sale of agricultural land.The Government also issues various agricultural programs to attract young farmers.Numerous policies were sought to make villages and agriculture new tourist attractions, many of which were issued by the regency/city governments in Bali during this period.As a result, the sharp decline in wet rice field EKSIS: Jurnal Riset Ekonomi Dan Bisnis Volume 18, No 2, November 2023 -April 2024 https://ejournal.stiedewantara.ac.id/index.php/001/article/view/1314area has stopped; The area of land devoted to rice fields decreased by only 0.2% per year.
If we look at the land use data for one year, for example, in 2015 alone, it appears that the land used for rice fields is only 14.20% of the total land available (Figure 4).The reduction of rice fields is in line with the increase in the number of hotel buildings, both starry and jasmine, to meet the tourism sector's demand, especially for the accommodation of tourists who come.Statistical data shows that in 2005, the number of star hotel room construction in Bali grew by 50% from 2000, namely 17,027 rooms in 2000 to 31,596 rooms in 2015 (BPS, 2017).

Structural Changes in Bali's Labor Market
How does the economic transformation of the DD effect impact the labour market?New economic opportunities will open up due to the deepening and expansion of tourism activities throughout the island.This is reflected in the quite dramatic change in work patterns among the Balinese population, both for most Balinese-born and immigrants from other islands.Other provinces experienced similar changes during this period.
Not only do many Balinese people move from agriculture to activities related to tourists.The age and education level of those working in non-agricultural fields are changing in response to the growing technical complexity of tourism relations, especially in communication and information technology.Given the rate of growth in output and employment, it is not surprising that real wages are also rising.
Figure 5 (five) shows the changes in the structure of jobs in large industries in Bali over fourteen years.Three patterns stand out.The first is a significant decline in the agricultural share of labour, which accelerated in the second period.From 2010-2017, the share of farming workers dropped to just under 20%, well below that in trade, restaurants, and hotels, where most workers related to the tourism industry are now employed.The decline in employment in agriculture is not surprising, given the trends in agricultural production discussed above.This is expected due to low productivity in this sector, which has been linked to high poverty rates throughout Indonesia, including in Bali (Suryahadi et al., 2018;Jayasuriya and Nehen, 1989).But the rate of decline, to just half of all jobs a decade and a half earlier, was staggering.

How can the new tourism development paradigm stem the effects of Dutch
Disease?
The structural changes that have occurred in the agricultural sector and the labour market show an indication that there has been a change in the structure of Bali's economy in three decades.This structural change could significantly increase revenue in the short term, as reflected in the Bali Provincial RGDP.However, in the long term, this condition, if left unchecked, can become a boomerang for the economy.The booming development of tourism has caused the growth of other sectors, namely agriculture and manufacturing, in Bali.When the growth of the two industries is marginalized as a result of the boom in tourism, this condition shows that the effect of Dutch Disease (DD) has hit the Bali economy.
Therefore, the current development of tourism must be directed to improving quality, not solely on quantity, with irregular mass tourism.They are bringing in many important tourists, maintaining the quality of economic development in Indonesia in general and Bali in particular.
As stated by Nirwandar (2011) and Suryadana (2013), tourism development in Indonesia is now not only emphasized on achieving high-income growth.Tourism development has seven important perspectives that bring more comprehensive benefits to the Indonesian economy (these seven goals of tourism development have been explained earlier).
In stemming the erosion of the agricultural sector, the sustainable development paradigm is essential in maintaining the sustainability of agricultural land.In this context, maintaining some land to remain productive agricultural land is the primary key.Sustainable agriculture not only meets residents' food needs but also has the potential to support logistics in the tourism sector.The beautiful green scenery of agricultural land is also a unique attraction for tourists outside Bali, such as terraced rice field tours in Ubud or garden tours in the Bedugul area.Lestari et al. (2021) and Suardi et al. (2016) explained that one way to stem land conversion is through active participation in agricultural institutional factors.For example, through the Subak institution.As a farming institution, Subak has the potential for fundamental strength in maintaining the existence of agricultural land.Subak's In addition to institutional factors, the policy of Bali Province's local Government, which limits the construction of star hotels in several areas, also has a significant portion in anticipation of the conversion of agricultural land.The policy regarding the moratorium on hotel development in three districts (Badung, Denpasar, and Gianyar) has been carried out since 2010.This policy was taken because the concentration of hotels in southern Bali (Sarbagita area) was already very high in 2010.It reached 90% of star-rated hotels south of Bali and 70% of non-star-rated hotels in southern Bali (BPS, 2010).
However, maintaining the growth of the agricultural sector is not enough just by retaining the land area.Human resources who are willing to be actively involved in it are needed."Honey" from the tourism sector has attracted the younger generation to switch from a livelihood in the agricultural industry to the tourism sector, which is quite promising.It is indeed the right of every citizen to choose the work they are engaged in according to their field of expertise.Considering the second paradigm of tourism development, poverty alleviation, every youth is free to enter the job market in any sector.
Regarding employment, it can be said that Bali can still avoid a significant boom in the DD sector, which affects tourism.However, the demand is very high and continues for local labour and capital from the tourism industry.While employment in agriculture has declined, the agricultural sector continues to grow during this period, and most of the population maintains a relationship with the farm sector through parttime farming.IT advances in the agriculture/plantation sector can also attract the young generation of Bali (although not much) to develop agriculture in Bali and remain interested in staying in this field.
For tourism development and the agricultural sector to support each other's employment conditions in Bali, a tourism development pattern is needed to harmonize each industry.One of them is community-based tourism.This community-based tourism development model emphasizes the role or participation of the community in developing tourism.Permatasari (2022) stated that community-based tourism aims to realize sustainable tourism development.The support and active involvement of all stakeholders, such as the central Government, local governments, and tourism entrepreneurs, also play a role in harmonizing employment conditions in sustainable development.

E. CONCLUSION
The development of tourism has always multiplied the country's foreign exchange receipts.The development of this sector has made tourism a leading industry in Bali's economic growth.However, this condition in the long term is a sign that Bali is starting to experience significant Dutch Disease effects, where growth in critical sectors is hampering growth in other industries and may even slow down the overall growth rate of the regional economy.Two indications that result from the marginalization of different sectors are the decreasing share of agricultural sector growth and the employment profile, which continues to be increasingly unbalanced from year to year because many are absorbed into the tourism sector.To stem this condition, applying a

Figure 3 :
Figure 3: Average Annual Growth in Land by Use in Bali, 1988-2007 and 2008-2016

Figure 4 :
Figure 4: Percentage of Land Area by Use in Bali, 2015

Table 1 : Previous Studies of Dutch Disease
Analytical tools: structural break cointegration frameworks, --The surge in oil prices along with the increase in Russian export revenues makes Russia a potential candidate to experience the DD effect.The dramatic increase in oil prices in recent decades, from $17 per barrel in the mid-1990s to about $55 in the mid-2000s to more than $110 in the early 2010s signals the importance of DD becoming a further concern for Russia.In recent decades, Russia's share of natural resources in export revenues has increased significantly, while its share of manufacturing has declined.Therefore, the Russian economy is heavily dependent on the export of natural resources, vulnerable to external shocks in the price of natural resources and as a country rich in natural resources, Russia is a good case to explore this phenomenon.