The relationship between tourism,foreign direct investment and economic growth: evidence from Iran

Tourism is one of the world's largest industries and an increasingly important source of foreign currency that is used to finance economic growth. The purpose of this study is to examine the long-term and short-term relationships between tourism and economic growth in Iran, by using annual data covering the 1985–2013 period and autoregressive distributed lag and the Error Correction model to examine the relationships between variables. The findings showed that there is a positive relationship between tourism expenditure and economic growth in the long term and short term. The result indicate that there is also positive relationship between the real effective exchange rate (REER), foreign direct investment (FDI) and economic growth. The Granger causality test shows a bidirectional causality running between tourism expenditure and economic growth.     

Tourism development and economic growth: a panel Granger causality analysis in the frequency domain

In this paper, we test the causal relationship between economic growth and tourism development in the 1995–2012 period using recently developed panel Granger causality tests that allow for country-level heterogeneity, thus leading to more accurate results for the 12 Mediterranean countries. Although results of the Dumitrescu and Hurlin [(2012) testing for Granger non-causality in heterogeneous panels. Economic Modelling, 29(4), 1450–1460] panel Granger causality test show a unidirectional causality from tourism development to economic growth, results of the Croux and Reusens [(2013). Do stock prices contain predictive power for the future economic activity? A Granger causality analysis in the frequency domain. Journal of Macroeconomics, 35, 93–103] panel Granger causality analysis in the frequency domain show that there is a bidirectional temporary and permanent causality between tourism development and economic growth. The bidirectional causality relationship between tourism development and economic growth, which is the main finding of this study, suggests that in order to achieve high economic growth, policy-makers should focus on developing the tourism sector.     

New insights into an old issue – examining the influence of tourism on economic growth: evidence from selected small island developing states

This paper uses relatively new heterogeneous panel autoregressive distributed lag cointegration methods to re-examine the long-run equilibrium and Granger causality relationship between tourism and economic growth for the small island developing states (SIDSs). In addition, the study incorporates energy consumption and foreign direct investment (FDI) as alternative growth determinants, during the period 1995–2014. After allowing for the heterogeneous country effect, a positive and statistically significant long-run equilibrium relationship between tourism, energy consumption, FDI, and gross domestic product, with a moderate convergence rate towards the long-run path is confirmed. The panel Granger causality test as proposed by Dumitrescu and Hurlin [(2012). Testing for Granger non-causality in heterogeneous panels. Economic Modelling, 29(4), 1450–1460.] shows bidirectional causality running from tourism to economic growth, from tourism to energy consumption and from energy consumption to economic growth, and unidirectional causality between FDI and tourism, between economic growth and FDI, and between FDI and energy consumption. Our empirical findings provide support for tourism-induced growth, tourism-induced energy consumption, tourism-induced investment, and the energy consumption-economic growth relationship in the case of SIDSs. Our empirical results resonate with the existing findings with major policy implications for the SIDSs.     

Does tourism cause growth? Evidence from Turkey

This paper examines the impact of detailed tourism expenditure on the long-run economic growth by employing Autoregressive Distributed Lag (ARDL) approach and causality test for data set of 2003:1 to 2012:4 in Turkey. The detailed tourism expenditure data are firstly employed for the causality of tourism expenditure on economic growth. The results of the bounds test show that there is a stable long-run relationship between accommodation expenses, transport expenditure, expenditure of sporting activities, sightseeing tour expenditure, clothing–footwear expenditure, gift expenditure and economic growth. The results of the causality test, on the other hand, show that there is a bidirectional causality between accommodation expenses, expenditure of sporting activities, gift expenditure and economic growth and a causal flow from transport expenditure to economic growth which is verified growth-led tourism hypothesis. Results reveal that sightseeing tour expenditure and expenditure of sporting activities are more successful on explaining the long-run growth in Turkey in terms of ARDL coefficients size. This result implies a policy that Turkey needs to invest tourism to gain more especially by focusing accommodation, sightseeing tours, sporting activities and transport infrastructure.     

Has the tourism-led growth hypothesis been validated? A literature review

Over 10 years have passed since the first paper on the tourism-led growth hypothesis (TLGH) was published in 2002. Since then, a wave of studies has appeared trying to understand the temporal relationship between tourism and economic growth. Hence, it is possible to provide an assessment in terms of econometric methods used and main empirical findings achieved so far. This paper presents an exhaustive review of approximately 100 peer-reviewed published papers on the TLGH. An overview on the economic theoretical framework behind the TLGH is also provided. Notably, the results present an increasing diversification in the econometric modelling used. With a few exceptions, the empirical findings suggest that overall international tourism drives economic growth.     

A nonlinear approach to the tourism-led growth hypothesis: the case of the MERCOSUR

This paper analyses the tourism-led growth hypothesis for the four countries of the MERCOSUR regional trade block. By applying nonlinear techniques, we explore whether tourism activity leads – in the long run – to economic growth, or, alternatively, economic expansion drives tourism growth, or indeed a bidirectional relationship exists between the two variables. To this end, non-parametric cointegration and causality tests are applied to quarterly data for the period 1990–2011. We show the existence of a cointegrated relationship between real per capita gross domestic product and tourism expenditure for all countries. Moreover, the linearity of this relation is rejected for both Argentina and Brazil (economies with a relatively diversified structure). The non-parametric causality tests confirm in all cases the causality from tourism to growth. Meanwhile, only for Uruguay and Argentina causality also goes in the inverse direction (from growth to tourism). Finally, the paper compares the results of the nonlinear approach with those obtained by using the traditional linear methodology.     

Small sample evidence on the tourism-led growth hypothesis in Lebanon

This paper investigates the contribution of tourism to economic growth in Lebanon for the time period of 1995–2010. The presence of long-run and causal relationships is investigated applying the bounds testing approach to cointegration and Granger causality tests. Because of the small sample (T?=?16), econometric approaches and critical values used for testing receive special attention. Additionally, a number of diagnostic tests are utilised to ensure that the model is suitable and correct. Interestingly, our results reveal that tourism and economic growth are cointegrated. The Granger causality test indicates that the tourism-led growth hypothesis is valid for Lebanon. Therefore, policy initiatives promoting tourism ought to be further developed and implemented to stimulate economic growth and development for the economy of Lebanon.     

Is the tourism‐led growth hypothesis stable for Malaysia? A note

This letter extends the Gunduz and Hatemi‐J study on the tourism‐led growth hypothesis with the Malaysian data. The rolling subsample causality test was employed to demonstrate the validity and stability of the tourism–growth causality relationship. Our result shows the causality relationship is valid and stable over the sample period. Copyright © 2009 John Wiley & Sons, Ltd.     

The relationship between tourism receipts,real effective exchange rate and economic growth in Tunisia

The objective of this paper is to analyse the role of tourism in the Tunisian economic growth. We used a trivariate model of real gross domestic product (GDP), real international tourism receipts and real effective exchange rate to discuss the relationship between tourism and economic growth. By using annual data for Tunisia for the period of 1970–2007, our results reveal that there is a cointegrating relationship between tourism and economic growth. In addition, our results for the Granger causality test indicate that tourism has a positive impact on GDP growth unidirectionally. Copyright © 2010 John Wiley & Sons, Ltd.     

Tourism development and economic growth in the Mediterranean countries: evidence from panel Granger causality tests

The aim of this study is to examine the relationship between tourism development and economic growth in the Mediterranean countries using the newly developed panel Granger causality tests for the 1995–2010 period. It is concluded that while there is bidirectional causal nexus between tourism development and economic growth for Portugal, unidirectional causal nexus from economic growth to tourism development is found for Spain, Italy, Tunisia, Cyprus, Croatia, Bulgaria and Greece. Therefore, the growth-led tourism hypothesis is supported in case of these seven countries. On the other hand, there is no causal relation for Malta and Egypt. The study finds evidence to support the tourism-led growth hypothesis for a group of panel in Mediterranean countries. The results of the overall study suggest that governments of Mediterranean countries should focus on economic policies to promote tourism as a potential source of economic growth.     

Exploring the dynamic linkages between tourism growth and environmental pollution: new evidence from the Mediterranean countries

ABSTRACT

The present study explores the impact of tourism on environmental pollution using a comprehensive set of air pollutants, namely CO₂, CO, NO_x, SO₂, PM_2.5, and PM₁₀, in a multivariate framework under the context of the Mediterranean countries. The panel cointegration tests indicate that there is a long-run equilibrium relationship between environmental pollution, energy consumption, economic development and tourism growth. The tourism-induced EKC hypothesis is validated for four out of six air pollution indicators in the Southern Mediterranean countries, whereas in the Northern Mediterranean region we fail to document any evidence supporting the hypothesis. In addition, tourism growth has a differential impact on different air pollution indicators across regions. The major findings from the panel Granger causality tests show that bidirectional causality exists between four air pollutants (CO₂, NO_x, SO_2, and PM_2.5) and tourism and unidirectional causality runs from CO and PM₁₀ to tourism growth in the Northern Mediterranean. In contrast, there is a feedback relationship between environmental pollution (CO and NO_x) and tourism growth and one-way causality running from environmental pollution (CO₂, SO_2, PM_2.5, and PM₁₀) to tourism development in the Southern Mediterranean.     

Comparing the contributions of tourism and non-tourism exports to economic growth in Malaysia

An in-depth study using data from 1974 to 2013 is conducted to assess the role of exports in Malaysia's economic growth through the neoclassical growth model. Unlike previous studies, we segregate exports into four major components, namely tourism, electrical and electronic (E&E), palm oil and rubbers. By doing so, we are able to assess the relative contributions of tourism and non-tourism (i.e. E&E, palm oil and rubbers) exports to Malaysia's economic growth. To achieve the objective of this study, we perform the cointegration, Granger causality and the variance decomposition tests. Our findings suggest that only tourism, E&E and palm oil exports significantly influence economic growth in the long-run. Likewise, our Granger causality results also suggest that only tourism, E&E and palm oil exports Granger-cause economic growth. Thus, it supports the tourism-led growth, E&E export-led growth (ELG) and palm oil ELG hypotheses in Malaysia. With reference to the contributions to economic growth, the long-run estimation results and the results of generalized variance decomposition consistently suggest that tourism is relatively more important than the three non-tourism exports, especially in explaining the long-term economic growth of Malaysia.     

International tourism and economic development in South Africa: a Granger causality test

One of the major objectives of macroeconomic policies in many developing countries is sustained economic growth, and South Africa has been striving to achieve and maintain this in various ways. One of these is through international tourism. Although international tourism contributes to the growth of many economies, it is in turn, impacted by growth in many developed countries. Real gross domestic product (GDP), international tourism earnings, real effective exchange rate and exports were analysed within a multivariate vector auto regressive model using annual data covering 1980–2005. The main focus of this study therefore was to demonstrate the direction of causality between international tourism earnings and long‐run economic growth of South Africa, among other variables, using Granger causality analysis. The result obtained showed a unidirectional causality running from international tourism earnings to real GDP, both in the short run and in the long run. The error correction mechanism carried out also supported this causality. Copyright © 2009 John Wiley & Sons, Ltd.     

Tourism,health and income in Singapore

This paper employs Granger causality test to investigate the long‐run and the short‐run dynamic interactions among tourism, economic development and health care development in Singapore. The test reveals that there is long‐run unidirectional Granger causality from health care development to economic development and from tourism to economic development. Both health care and tourism have positive effects on economic development in the long run. In the short run, there is a unidirectional Granger causality from economic development to health care development and a bidirectional causality between health care development and tourism. Copyright © 2009 John Wiley & Sons, Ltd.     

Tourism,Real Effective Exchange Rate and Economic Growth: Empirical Evidence for Croatia

The aim of this paper is to examine the long‐run and short‐run relationship between tourism, real effective exchange rate and economic growth in Croatia. The econometric framework used for analysis is the Johansen Maximum Likelihood cointegration technique. For testing the stability of long‐run equilibrium relationship vector error correction model technique has been applied on a quarterly data set covering the period 1996–2013. The main findings of the paper confirm the stability of the long‐run equilibrium relationship between tourist arrivals (ARRIVAL), openness of the economy (OPEN) and real effective exchange rate as independent variable and gross domestic product (GDP) as dependent variable in Croatia. Furthermore, the results indicate short‐run causality between OPEN and GDP, as well as between real effective exchange rate and GDP. Copyright © 2014 John Wiley & Sons, Ltd.     

Tourism and Long‐run Economic Growth in Aruba

This study examines the long‐run relationship between tourism development and economic growth in a small island destination. Determining whether the nature of the relationship is unidirectional or bidirectional provides insightful information as to policies to be implemented. This information is crucial in a resource‐poor environment, such as a small island destination. The study employs an econometric methodology consisting of unit root testing, co‐integration analysis, vector error correction modeling and Granger causality testing. Results confirm the reciprocal hypothesis. The policy implication is that resource allocation supporting both the tourism and tourism‐related industries could benefit both tourism development and economic growth. Copyright © 2013 John Wiley & Sons, Ltd.     

Temporal Granger Causality and the Dynamics Relationship Between Real Tourism Receipts,Real Income and Real Exchange Rates in Malaysia

This study applies the bounds testing approach, error‐correction modelling and persistence profile to analyse the dynamic relationship between real tourism receipts, real income and real exchange rates in Malaysia. The present study covers the annual sample period from 1974 to 2009. The results reveal that a long‐run relationship exists between the variables. In the short run, this study finds no Granger causality between real tourism receipts and real income, whereas there is bidirectional causality in the long‐run. Moreover, we also find unidirectional causality running from real exchange rates to real tourism receipts and real income in both short‐ and long‐run. Copyright © 2012 John Wiley & Sons, Ltd.     

Tourism‐led Growth Revisited for Spain: Causality,Business Cycles and Structural Breaks

This paper is aimed to test the causality relationship between the cycles of tourism and economic development for the case of Spain using quarterly time‐series data on gross domestic product, the number of nights spent in Spanish tourist accommodations and real exchange rates from 1980 to 2013. A distinction between nights spent by foreign and national tourists is also made. Although no evidence of causality is found on preliminary results, structural breaks affecting the relationships between the variables are detected. Causality from economic growth towards tourist activity is found until 1985. Results also confirm bidirectional causality from 2000 onwards. Copyright © 2014 John Wiley & Sons, Ltd.     

The causal relationship between air transport and economic growth: Empirical evidence from South Asia

This paper examines the causal relationship between air transport and economic growth in the South Asian context. Using panel data over a period of 42 years (1973–2014), we apply Pedroni/Johansen cointegration test methods, followed by Granger long-run and Wald short-run causality tests. To allow for spatial heterogeneity we then apply Time Series Cross Section (TSCS) Granger causality tests for each of the eight analysed countries separately. Our results confirm a long-run uni-directional Granger causality which runs from GDP to air passenger traffic and also to air freight volumes. Contrary to the existing literature we do not find a long-run bi-directional causality which confirms that spatial dimensions and context matter (i.e. low income and large populations). The absence of short-run causality and the identified time lags of 3–4 years should guide aviation firms and policy makers in the preparation of necessary infrastructure required to support the strong air transport growth potential.     

Tourism and electricity consumption in 9 European countries: a decomposition analysis approach

ABSTRACT

Tourism is a major economic activity constituting one of the main sectors in economic terms. European countries traditionally play a significant role in the overall international tourism flow. However, while tourism has a noticeable positive impact on economic development, it also contributes to environmental degradation by increasing energy consumption and therefore emissions. This paper analyses the relationships between Hotel and Restaurant electricity consumption and tourism growth in 9 European countries during 2004–2012, for which there is a sufficient amount of data available. A decomposition analysis based on log-mean Divisia index method (LMDI I) is conducted to examine electricity consumption on this sector and their components. Five decomposition factors are considered: energy intensity (EI), physical capital intensity (KI), physical and human capital relationship (KL), human capital intensity (LI) and the tourism factor (T). Results show the evolution of energy consumption related to this sector, identifying the driving forces that have influenced it.