The role of tourism in driving economic growth: An asymmetric augmented autoregressive distributed lag analysis of Singapore's experience

Abstract

AbstractTourism has long been recognized as a potential force for economic growth in various parts of the globe. This study revisits this causal relationship to demonstrate the consequences of long‐run and short‐run effects between tourism development and economic growth in the context of Singapore for the period 1983:1 to 2020:4. We employ an augmented autoregressive distributed lag (AARDL) to prevent degenerative results and ensure the robustness of findings. We also control for variables such as foreign direct investment, net export, gross fixed capital formation, labor, and government expenditure. The overall empirical results provide support for the positive implications of tourism development for economic growth in Singapore in the long run, and its elasticity is 0.14 in increasing and 0.08 in decreasing. This implies that tourism can be one of the important factors for Singapore's economic growth in the long run, but in the short run, the impact is either negative or insignificant. This study provides important policy implications and recommendations.