Is there growth impact of tourism? Evidence from selected small island states

This study investigates the growth impact of international tourist arrivals on carbon emissions in selected small island states via Environmental Kuznets Curve (EKC) hypothesis. The study employed a panel-based multivariate model for seven small islands between the periods of 1995 and 2013 to evaluate the long-run equilibrium relationships between international tourism and carbon emissions through the channels of energy consumption and economic growth. Findings from the panel cointegration results show the existence of a long-run equilibrium relationship between the variables of interest. International tourist arrivals have a negatively significant impact on carbon dioxide emissions in the long run. Thus, we infer that the law of diminishing marginal returns with regard to tourism-induced EKC hypothesis holds in the case of small island states.     

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.     

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.     

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.     

Domestic air passenger traffic and economic growth in China: Evidence from heterogeneous panel models

This paper applies recent panel methodology to examine the short-run dynamics, the long-run equilibrium relationships and the Granger causal relationship between economic growth and domestic air passenger traffic. It is based on the quarterly panel data of 29 provinces in China from the period of 2006Q1 to 2012Q3. Tests for panel unit roots, cointegration in heterogeneous panels and panel causality are employed in a bi-variate panel vector error correction model (PVECM), which is estimated by the system generalized moment method (SYS-GMM). The results show evidence of a long-run equilibrium relationship between economic growth and domestic air passenger traffic. Specifically, 1% increase in the air passenger traffic is found to lead to an increase of 0.943% in real gross domestic product (GDP). A long-run and strong bi-directional Granger causal relationship is found between these two series. It is also found that there is a short-run uni-directional Granger causality running from the domestic air passenger traffic to the 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.     

The interaction between tourism and FDI in real estate in OECD countries

The purpose of this article is to investigate the empirical link between foreign direct investment (FDI) in real estate sector (FDIRE) and international tourism (TOUR). Panel co-integration and panel Granger causality techniques are applied to analyse both long- and short-run relationships for the case study of selected OECD countries. Our empirical results show the existence of the long-run and a bi-directional causal relationship between FDIRE and TOUR. The results provide some implications for policy-makers.     

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.     

A Panel Cointegration Analysis of the Impact of Tourism on Economic Growth: Evidence from the Middle East Region

This paper examines the contribution of tourism industry to the GDP of three selected destinations in the Middle East region: Bahrain, Jordan and Saudi Arabia. We introduce a quadratic functional form and apply the advanced panel cointegration dynamic model with robust estimation to test our hypothesis. Our analysis is based on a comprehensive set of panel data of tourism receipts, education investment, foreign direct investment and fixed capital formation over the period of 1981–2008. The results show a long‐run relationship between tourism growth and GDP. We also show that tourism has a stronger impact on the economy than other related sectors. Copyright © 2013 John Wiley & Sons, Ltd.     

Dynamic linkages between tourism transportation expenditures,carbon dioxide emission,energy consumption and growth factors: evidence from the transition economies

Tourism transport profoundly affects economic growth, energy consumption and carbon dioxide emissions. This study is an attempt to examine the impact of international tourism transportation expenditures, energy demand, foreign direct investment inflows, trade openness and urban population on carbon dioxide emission and per capita income for the panel of 11 transition Economies, over the period of 1995–2013. The results show that per capita income escalates the carbon dioxide emission (CO₂), which deteriorates the natural environment. International tourism receipts and international tourism expenditures for travel items are associated with the intensifying CO₂ emission and per capita income in the region. The study confirmed the energy-led emissions, FDI-led emissions, FDI-led growth, income-led emissions, income-led energy demand, trade-led growth and trade-led energy demand. The causality results further substantiate the the tourism-led growth and FDI hypothesis in the region. Finally, the variance decomposition analysis confirmed the following results, that is, (i) per capita income is the contributor that least influences CO₂ emissions, (ii) urban population influences per capita income and (iii) international tourism transportation expenditures will influence CO₂ emissions and per capita income for the next 10-year period.     

Air cargo expansion and economic growth: Finding the empirical link

This paper applies Granger causality tests to examine the causal relationship between air cargo expansion and economic growth in Taiwan for the period 1974–2006. The results of cointegration tests show a long-run equilibrium and bi-directional relationship between air cargo expansion and economic growth in the case of Taiwan.     

Travel and tourism competitiveness index: The impact of air transportation,railways transportation,travel and transport services on international inbound and outbound tourism

The objective of the study is to examine the impact of air transportation, railways transportation, travel and transport services on international inbound and outbound tourism in a panel of 19 tourists - oriented countries, over a period of 1990–2014. By applying principal component analysis, the study constructs travel and tourism competitiveness index for inbound and outbound tourism. The main constructs of inbound tourism index include international tourists' arrival, tourism receipts, receipts of passengers' transports items and travel items while the constructs of the outbound index include international tourists' departure, tourism expenditures, and expenditures for passengers transport and travel items. The result of panel Fully Modified OLS (FMOLS) regression shows that the presence of air transportation, railways transportation, and trade openness positively affect inbound tourism index, while travel and transport services negatively affect tourism competitiveness index. The causality results confirm the bidirectional relationship between inbound tourism, air transportation, railways passengers carried, trade openness and travel and transport services, while there is a unidirectional causality running from inbound index to railway goods transported, from air transport freight to trade factor, and from travel services to air transport freight. Outbound tourism index confirmed the bidirectional causality relationship with air transportation, railways transportation, and travel and transport services, while the causality running from outbound index to trade factor, from air transport passenger carried to travel services, and from railway goods transported to trade and transport services, which support the unidirectional causality relationship between them. The variance decomposition results show that air transportation freight is the contributor that largely influences inbound-outbound tourism, while railways passengers carried and trade openness has the least share to influence inbound and outbound tourism index for the next 10-year period. The impulse response function indicates that air transportation, railways transportation, trade openness and travel services will positively impact on inbound truism while travel and transport services will positively affect outbound tourism for the next 10-year period. The study concludes with the importance of transportation sector that deem desirable to promote tourism worldwide. The concentration of different modes of transportation including air transportation, railways transportation, and travel and transport system would helpful to advance international tourism.     

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.     

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.     

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.     

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.     

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.     

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,globalization and economic growth: a panel cointegration analysis for selected West African States

This study examined the tourism-led hypothesis for selected 11 countries of Economic Community of West African States (ECOWAS). Panel cointegration technique was employed to inspect long-run relationship between study variables. Results of fully modified ordinary least squares and dynamic ordinary least squares confirmed the positive effect of physical capital, tourism and economic globalization index on economic growth. Thus, tourism-led growth hypothesis exists in ECOWAS. Conversely, negative impact of foreign direct investment on growth was captured.     

Inbound tourism and long-run economic growth

There is an upsurge of literature investigating the relationship between inbound tourism expansion and economic growth with special emphasis on developing countries. Some countries – such as Spain and Italy – can be taken as examples of demonstrating such a successful trajectory. This paper provides an empirical investigation of the evolution of the Spanish and Italian economies and their respective tourism sectors from the 1950s and 1960s, respectively. This research is theoretically based on the literature on demand-based growth and the methodology adopted is that of the integration, cointegration and multivariate Granger causality tests. The results show the influencing role of inbound tourism for both economies.