Investigating the tourism and economic growth linkage: a panel causality analysis for the SAARC countries

Tourism receipts and expenditure are considered to be causally related to economic growth. The present study investigates the causal relationship between tourism receipts and tourism expenditure to economic growth for a panel of the South Asian Association for Regional Cooperation (SAARC) countries over a 20-year period (1995–2014). The present study used panel Granger causality tests and panel fully modified ordinary least squares to test the presence and magnitude of the causality. Results indicated a bidirectional causal linkage between growth and tourism expenditure only, while tourism receipts were found to influence growth. Tourism expenditure was found to have a negative effect on growth.