Examining the impact of tourism on economic growth in the Republic of South Africa

Abstract

Examining the impact of tourism on economic growth in the Republic of South Africa (1995–2020) is the subject of this thesis. Tourism is widely recognized as one of the factors that contributes to a country's long-term economic development and helps to raise average income per person across the board. In this regard, international tourism makes a lot of positive contributions to economic growth in a variety of ways. One of the most fundamental reasons why tourism is so important is that money from tourism helps cover the country's need for foreign currency and, as a result, contributes to the reduction of the balance of payment deficit. Argue that, in addition to the information previously stated, the tourism industry contributes to economic development in a number of different ways. For example, tourism profits can be invested in fixed assets; tourism promotes a competitive market and investments in new facilities; tourism stimulates other sectors of the economy through direct, indirect, and induced effects; tourism creates job opportunities; and tourism promotes foreign travel and exchange rates. The ARDL model and the Granger causality test were utilized in this thesis to determine the connection between the dependent and independent variables. The findings suggest that tourism has a beneficial influence on South African economic development, but exports and exchange rates have a negative impact. Given that there is a causal link between tourism and economic development, our evidence of reliance may support the deployment of these strategies. All of this was done by using the Eviews statistical software. Also, when tourism is promoted and it is discovered that growth rates are interdependent, it may be acceptable to impose tourist laws since these rules take into consideration the degree of tail dependency that occurs between growth rates over time.