Abstract
In the developing economy, tourism is the most visible and steadiest growing facade. Tourism is considered one of the rapidly increasing elements for economic development from the last two decades. Therefore, the proposed study used vector autoregression (VAR) model, error correction model (ECM), and the Granger causality to check the relationship between the tourism industry and economic growth based on the data of the Beijing municipal bureau of statistics from 1994 to 2015. Gross domestic product (GDP) is used as a replacement variable for the economic growth index, while internal tourism revenue is used as a tourism industry indicator. The study supports the tourism-led growth hypothesis proposed in the existing literature in a different survey of tourism and economic development. The results show that there is a strong relationship in the tourism industry and economic growth in the context of Beijing, and at the same time, tourism creates a more significant increase in long run local real economic accomplishments. The results of the VAR model confirm that in the long run, Beijing’s economic growth is affected by domestic tourism, while the ECM model shows unidirectional results in the short term. Similarly, there is a one-way causal relationship between the tourism industry and economic growth in Beijing, China. The empirical results are in strong support of the concept that tourism causes growth.
Highlights
Tourism-led growth literature proposed that the tourism industry plays a vital role in economic growth
This study is conducted using the cointegration test, vector autoregression (VAR) model, error correction model (ECM), and Granger causality to analyze the relationship between the tourism industry and economic growth in Beijing, China for the period of
Both the variables are subject to the first-order and it is0.0329 shown in the table Non-stationary that they are
Summary
Tourism-led growth literature proposed that the tourism industry plays a vital role in economic growth. As the study is conducted worldwide by different researchers and over an unusual period, still there is a question mark as to whether the relationship between tourism and economic growth is unidirectional or bidirectional. This study is conducted using the cointegration test, vector autoregression (VAR) model, error correction model (ECM), and Granger causality to analyze the relationship between the tourism industry and economic growth in Beijing, China for the period of. The study uses the three models together in order to gain a better understanding of the survey, which is missed in the limited empirical literature about tourism and economic growth.
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