Does Tourism Affect Economic Growth of China? A Panel Granger Causality Approach

Yong Su, Jacob Cherian, Muhammad Safdar Sial, Alina Badulescu, Phung Anh Thu, Daniel Badulescu and Sarminah Samad
Additional contact information
Yong Su: Law and Public Management School, Leshan Normal University, Leshan City 614000, China
Jacob Cherian: College of Business, Abu Dhabi University, P.O. Box 59911, Abu Dhabi, United Arab Emirates
Muhammad Safdar Sial: Department of Management Sciences, COMSATS University Islamabad (CUI), Islamabad 44000, Pakistan
Phung Anh Thu: Faculty of Finance and Accounting, Nguyen Tat Thanh University, 300 A Nguyen Tat Thanh Street, District 4, Ho Chi Minh City 700000, Vietnam
Sarminah Samad: Department of Business Administration, College of Business and Administration, Princess Nourah Bint Abdulrahman University, Riyadh 11671, Saudi Arabia

Sustainability, 2021, vol. 13, issue 3, 1-12

Abstract: The main purpose of the current study is to investigate if tourism affects economic growth of China. The data set has been acquired from the Beijing Municipal Bureau of Statistics, and the time span of the data set takes into account a 20-year time period, from 2000 to 2019. To determine the strength of the above-mentioned relationship previous models that have been used for this research are mainly VAR (vector auto-regression) and VECM (vector error correction) models. The VAR and VECM models have been conducted together with the Granger causality test. The internal revenue generated from tourism-related activities is taken as being the main indicator for the tourism industry, while economic growth is determined by GDP (gross domestic product). We support the above-mentioned notion, as we found that a strong relationship exists between the development of the tourism industry and economic growth. Moreover, our analysis also indicates that this industry has a major impact on long-term economic growth in the region as well. This study thus provides further support to the existing literature on the topic of tourism and the impact that tourism-related activities have upon economic development and growth. The existence and the impact of tourism-related activities upon long-term economic growth were confirmed by the results of the VAR models. At the same time, the unidirectional results of VECM models have confirmed the existence of economic growth in the short term. In our case, the cardinal relationship between the development of the tourism industry and the economic growth in the Beijing region of China have managed to provide strong empirical support to the earlier stated notions and to the literature alike.

Keywords: tourism; economic growth; cointegration test; VAR model; VECM model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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