Abstract
Tourism is vital to the success of many economies worldwide and has been a widely researched area for many years. Unfortunately, an insufficient number of studies have been conducted on this subject in the context of Saudi Arabia. Therefore, this research investigates the role of tourism in promoting economic growth in the Kingdom of Saudi Arabia by using annual time series data from 2003 to 2019. The study uses basic statistics, correlation coefficients, the unit root test, the Johansen co-integration test, the co-integration regression test and the Granger causality test to check the relationship between tourism and economic growth. The results show that economic growth has a long-run relationship with tourism receipts, tourism expenditures and the number of tourist arrivals; the number of tourist arrivals has a strong relationship with economic growth, compared to other parameters. The empirical results validate the concept that tourism promotes economic growth in the kingdom of Saudi Arabia.
Highlights
That means that the endogenous variable, i.e., economic growth, and exogenous variable, i.e., tourism receipts, are strongly correlated with the coefficient of 0.834
An increase of 1 percent in tourism expenditure leads to an increase of 0.82 percent in economic growth, and a 1 percent increase in the number of tourist arrivals leads to an increase of 0.925 percent in economic growth
The stationarity test showed that tourism receipts, tourism expenditure, number of tourist arrivals, and economic growth become stationary at zero, and the first-order difference
Summary
Given the study of Turner and Freiermuth (2016), tourism has become a strong pillar for sustainable development for both developed and emerging economies, as it offers various cultural, social, technological, experiential, and natural products for leisure and business. In this connection, the World Travel and Tourism Council (WTTC 2021) revealed that travel and tourism plays a vital role in the creation of jobs, both including its direct, indirect and induced impacts; it estimated that 1 in 4 jobs created across the world, i.e., about 334 million or 10.6% of all jobs, accounted for USD 9.2 trillion, 10.4%. Tourism is considered a significant part of the trade-in international services and has become a prominent and growing industry
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