Abstract
The local and international communities play an important role in the sustainable growth of the Malaysian tourism industry. The principle of sustainable growth in the tourism industry was proposed by the World Tourism Organization (WTO) in 1988. As the tourism industry is one of the largest and fastest growing industries in Malaysia, the government has poured considerable effort into promoting this industry consistent with the objective of the Economic Transformation Program (ETP) to transform from a resource-based economy to a service-based economy. This study aimed to test the hypothesis of tourism-led growth from Malaysia’s perspective. The tourism revenue earned by the government can be used to invest in industry to further promote economic growth in Malaysia. Hence, tourist receipts and capital investment in the tourism industry are important factors that can affect the nation’s economic growth. Utilizing Malaysian data from 1995 to 2016, the study employed the Autoregressive Distributed Lag (ARDL) approach to examine whether the tourism-led growth is valid in this study. Empirical findings indicated that both variables have a significant positive impact on economic growth and the hypothesis of tourism-led growth is accepted in Malaysia.
Highlights
The tourism industry is one of the leading service industries and is considered a pivotal source of economic growth in the world economy
Tourist receipts and capital investment in the tourism industry were employed in this study to determine their empirical effects on growth in the Malaysian economy
The empirical results show that tourist receipts and capital investment in the tourism industry have significant positive impacts on economic growth in Malaysia
Summary
The tourism industry is one of the leading service industries and is considered a pivotal source of economic growth in the world economy. The Malaysian tourism industry was the sixth largest contributor to the national account in 2014 (Mohsen, 2015a). This is one of the industries the government emphasizes in the Economic Transformation Programme (ETP) to strengthen and diversify economic risk. It is believed that the Malaysian tourism has contributed significantly in generating national income. The total contribution of Malaysian tourism was RM182.4 billion or accounted 14.8% of national income (Department of Statistics Malaysia, 2017). Malaysian tourism is the third largest foreign income earner after manufacturing and palm oil industry in Malaysia which accounting for over 7.0% of the country economy in 2016 (Misachi, 2017)
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