Tourism Development and Economic Growth in Bangladesh: New Evidence from Nonlinear Autoregressive Distributed Lag

Abdul Mahidud Khan, Sakib Amin, Adib Ahmed and Tanzila Sultana
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Abdul Mahidud Khan: Department of Economics, Bangladesh University of Professionals, Bangladesh,
Adib Ahmed: Department of Economics, Bangladesh University of Professionals, Bangladesh,
Tanzila Sultana: Bangladesh Institute of Governance and Management, Bangladesh.

International Journal of Economics and Financial Issues, 2021, vol. 11, issue 2, 100-107

Abstract: We examine the long-run relationship between tourism development and economic growth using the Nonlinear Autoregressive Distributed Lag (NARDL) model for Bangladesh using annual data from 1980-2016. We find an asymmetric relationship between tourism and Bangladesh's economy since a one percent increase in tourism receipt increases economic growth by about 0.19 percent. On the contrary, due to a one percent decline in the tourism receipt, economic growth will decrease by about 0.66 percent. So, the decline in tourism receipt will have a higher negative impact on economic growth than the increase in the tourism receipt in Bangladesh, which result is important for current pandemic situation in tourism due to Covid-19. We also reveal that the impact of positive change in the tourism revenue on GDP stabilizes around 8 years; however, an adverse change on GDP does not stabilize in 15 years. We recommend that a systematic allocation of resources is required to promote and stimulate the tourism industry in Bangladesh for a favourable impact on the country's long-run economic development.

Keywords: Tourism Development; Economic Growth; NARDL; Bangladesh; Asymmetry (search for similar items in EconPapers)
JEL-codes: C32 O50 Z32 (search for similar items in EconPapers)
Date: 2021
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