Time-varying mechanisms between foreign direct investment and tourism development under the new normal in China

Xiuying Ma, Yongjing Wang, Haiyan Song and Han Liu
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Xiuying Ma: Jilin University of Finance and Economics, China
Yongjing Wang: Jilin University of Finance and Economics, China
Haiyan Song: The Hong Kong Polytechnic University, China
Han Liu: Jilin University, China

Tourism Economics, 2020, vol. 26, issue 2, 324-343

Abstract: This study is aimed at investigating what has happened to the dynamic linkages between foreign direct investment (FDI) and tourism development in China since the emergence of the so-called new normal economy. A time-varying parameter vector autoregressive (TVP-VAR) model is used for the first time to analyze the equi-spaced and time-point impulse responses between FDI, foreign exchange earnings from international tourism (FEE), and gross domestic product using annual data taken from 1983 to 2017. The results for the equi-spaced impulse response show that a difference in intensity for the interaction effect between FDI and FEE will change with different intervals. In addition, impulse response diagrams for FDI and FEE based on changes in economic development at three significant points in time reveal that the effect FDI in the new normal period has had the greatest impact on FEE in 2012, followed in decreasing impact by 2003 and then 1997.

Keywords: foreign direct investment; foreign exchange earnings from international tourism; impulse response analysis; new normal; TVP-VAR model (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:26:y:2020:i:2:p:324-343

DOI: 10.1177/1354816619870948

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