TOURISM DEVELOPMENT AND ECONOMIC GROWTH IN DEVELOPING COUNTRIES

E. M. Ekanayake and Aubrey E. Long

The International Journal of Business and Finance Research, 2012, vol. 6, issue 1, 51-63

Abstract: The objective of this study is to investigate the relationships between tourism development and economic growth in developing countries using the newly developed heterogeneous panel cointegration technique. This study examines the causal relationship between tourism development and economic growth using Granger causality tests in a multivariate model and using the annual data for the 1995–2009 period. The study finds no evidence to support the tourism-led growth hypothesis. The results of the FMOLS show that, though the elasticity of tourism revenue with respect to real GDP is not statistically significant for all regions, its positive sign indicates that tourism revenue makes a positive contribution to economic growth in developing countries. The results of the study suggest that governments of developing countries should focus on economic policies to promote tourism as a potential source of economic growth.

Keywords: Tourism; economic growth; panel cointegration; causality (search for similar items in EconPapers)
JEL-codes: F43 L83 O40 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (37)

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