THE RELATIONSHIP BETWEEN INTERNATIONAL TOURIST ARRIVALS AND FOREIGN DIRECT INVESTMENT: A GRANGER CAUSALITY ANALYSIS

Ly-Pham ThiMinh, Hieu LeMinh and Phung-Tran ThiPhi

Acta Oeconomica Pragensia, 2017, vol. 2017, issue 4, 3-12

Abstract: It is widely recognized that a rapid increase in foreign direct investment leads to an increase in tourism at different levels. This paper applied a Granger Causality test to investigate the causal relationship between International Tourist Arrivals (ITA) and Foreign Direct Investment (FDI) across countries. By using time series data from six countries in the top ten European destinations (France, Spain, Italy, Germany, Turkey, and the United Kingdom) for the 1980-2014 period, the findings reveal that there is a unidirectional causality between ITA and FDI. The results are strongly proven with the same results when the lag between FDI and ITA is lengthened at lag 1. Moreover, the outcome evidence has a unidirectional relationship running from FDI to ITA when GDP is added as the controlling variable.

Keywords: international tourist arrivals; foreign direct investment; granger causality (search for similar items in EconPapers)
JEL-codes: C23 F21 L83 O57 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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DOI: 10.18267/j.aop.586

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