Bali's Dualistic Economy: Agriculture and Tourism

Bali as a part of Indonesia geographically is very small in size, only 0.11 percent of the entire territory of Indonesia. Likewise, its role from the economic side is almost insignificant because it only accounts for 1.2 percent of Indonesia's total income. The only factor that makes Bali meaningful for Indonesia is because of its tourism. Bali tourism is also very specific because it is characterized by the local culture of the people related to agriculture. Although Bali is small, its population is quite large. The 2010 census recorded Bali's population of 3.9 million and grew to around 4.4 million by 2020. Of this number, almost half live in tourist areas: Denpasar, Badung and Gianyar where most tourism facilities are located there.

            Bali's economy is characterized by three main economic sectors, namely: agriculture, manufacturing, and tourism. Since the last two decades, one has witnessed that the development of the Bali region has led to a dualistic economy, a term used by Boeke to describe the coexistence of two different regions: the traditional sector and the modern sector. Agriculture is also called the traditional sector or pre-capitalist indigenous sector which develops slowly, the technology used is simple, and labour productivity is relatively low. Traditional communities have limited needs which are generally as subsistence farmers where the production produced is sufficient to meet their consumption needs. The desire to produce more is hampered because of inadequate infrastructure and low motivation because their needs have been met. Their cultural arts have made them feel satisfied with what they have achieved. As a result of low production causes labour productivity is also low despite high land productivity. The traditional irrigation system known as Subak has been able to create high agricultural production due to the regular availability of water. The flaring globalization has permeated the countryside. The flow of information spread to all levels of society, but the scope of information was hampered because the internet network had not yet entered remote villages. The information revolution has changed the structure of agricultural life. Therefore agriculture has developed since a decade ago, but still belongs to the traditional sector because of its cultural characteristics that are closely related to the religion of the community, namely Hinduism.

On the other hand, tourism as a modern sector is developing quite rapidly. In contrast to agriculture, the tourism sector is called the capitalist sector because it is seen to favour profits only. Tourism uses far greater capital than is used in the agricultural sector so that the productivity of its workers is also higher. Besides that tourism has direct contact with foreign countries so that its development becomes faster, and progress abroad is quickly followed by tourism actors. Even how to display goods in stores follow the western style. Although tourism is called modern but in essence it is very dependent on agriculture because Bali tourism is cultural tourism and culture is rooted in agriculture. Thus, these two sectors are interdependent sectors, but the development of tourism is much faster than the development of agriculture. The development of these two sectors does not always go hand in hand, the coexistence of the two does not run in balance from the economic side. The multiplier effect of the tourism sector does not work fully in the agricultural sector due to a leak age in the tourism sector. The biggest leakage was in the food and beverages of five star hotels. Around 51 percent of food and beverages for five-star hotels are imported from abroad. For example, hotels, especially star hotels, almost do not use local beef for health and taste reasons. This makes sense and is acceptable because the quality of local meat developed in the agricultural sector is poor because the management used is less advanced. The technology used for meat processing and maintenance is also limited.

            This dualistic economic concept was developed by Sir Arthur Lewis as the basis for a two-sector development model. The difference between the rural traditional sector and the urban capitalist sector is used as a basic analysis to explain why the economy is growing. The rural sector with a surplus population provides labour to be employed in the capitalist economy. The greater profits of the capitalist sector make it possible to absorb all surplus labour in rural areas. However, in Bali this did not work as expected, ie workers in the agricultural sector could not move to the tourism sector easily because they lacked competence in the tourism sector. Even if they want to work in the tourism sector they must first take a special tourism education and this can take at least three years to obtain competent qualifications. Thus, a dualistic economy does not benefit the agricultural sector.