Journal of Infrastructure, Policy and Development 2024, 8(5), 3799. https://doi.org/10.24294/jipd.v8i5.3799 1 Article Unveiling Indonesia’s poverty dynamics: Analyzing the structural impact of the tourism sector on poverty depth and severity Suparman * , Yunus Sading, Maskuri Sutomo, Muzakir Department of Economics, Faculty of Economics and Business, Universitas Tadulako, Kota Palu, Sulawesi Tengah 94148, Indonesia * Corresponding author: Suparman, suparman.untad@gmail.com Abstract: This study addresses the impact of the tourism sector on poverty, poverty depth, and poverty severity in Indonesia, focusing on the micro-level dynamics in the province. Despite numerous tourism destinations, their strategic contribution to regional progress remains underexplored. The motivation stems from the need to comprehend the nuanced relationship between tourism and poverty at both the national and local levels, with specific attention to the untapped potential at the province level in Indonesia. We hypothesize that a higher tourism sector GRDP will be inversely correlated with poverty levels, and the inclusion of a Covid-19 variable will reveal a structural impact on poverty dynamics. Employing a Panel Regression Model, secondary data from the Central Statistics Agency (BPS) spanning 2011–2020 is utilized. A panel data regression equation model, including CEM, FEM, and REM, is employed to analyze the intricate relationship between tourism and poverty. The findings demonstrate a negative correlation between higher tourism sector GRDP and the number of poor people. The Covid-19 variable, considered a structural break, reveals a significant association between increased cases and elevated poverty and severity across Indonesian provinces. This study contributes a micro-level analysis of tourism’s role, emphasizing its impact at the provincial level. The findings underscore the need for strategic initiatives to harness the untapped potential of tourism in alleviating poverty and promoting regional progress. Keywords: regional development; panel regression model; tourism sector; poverty; Covid-19 pandemic 1. Introduction Indonesia is one of the countries with the greatest potential for tourism in the world, and this tourism potential has already generated significant revenue for the country. However, in recent years, since the outbreak of the Covid-19 pandemic, there has been a structural break in the Tourism Sector in Indonesia. This has led to a decline in the number of tourist visits, especially foreign tourists, which are a major source of foreign exchange earnings for the national economy. The prospects for tourism growth in developing countries have been a focus, with the Tourism Sector seen as a tool for poverty alleviation. Various stakeholders and institutions, such as the United Nations World Tourism Organization (UN-WTO), governments, and development organizations, believe that tourism can be a primary driver for poverty reduction (Spenceley and Meyer, 2012). However, some research findings suggest otherwise. For example, Tosun (2000) argues that while tourism aims to reduce poverty in local destinations, in reality, it often leads to the opposite outcome. Numerous studies support the idea that tourism can exacerbate poverty (Ashley et al., 2001; Mahony and Van Zyl, 2002). CITATION Suparman, Sading Y, Sutomo M, Muzakir. (2024). Unveiling Indonesia’s poverty dynamics: Analyzing the structural impact of the tourism sector on poverty depth and severity. Journal of Infrastructure, Policy and Development. 8(5): 3799. https://doi.org/10.24294/jipd.v8i5.37 99 ARTICLE INFO Received: 22 December 2023 Accepted: 8 January 2023 Available online: 28 April 2024 COPYRIGHT Copyright © 2024 by author(s). Journal of Infrastructure, Policy and Development is published by EnPress Publisher, LLC. This work is licensed under the Creative Commons Attribution (CC BY) license. https://creativecommons.org/licenses/ by/4.0/