Transport Infrastructure, Energy Use, Emissions, Tourism, and Economic Growth: A Multivariate Analysis

Abstract

This paper provides empirical proof on the causal relationships between transport infrastructure development, transport sector energy consumption, transport sector CO2 emissions, tourism, and economic growth in the Philippines. The causal relationships were explored with respect to timing (i.e. lagged or no lag relationship), direction (i.e. unidirectional or bidirectional), and period (i.e. short-run effect vs. long run effect) by employing unit root, Johansen co-integration, and vector autoregressive (VAR) model tests. The results showed the existence of unidirectional short-run lagged causality running from transport infrastructure development, international tourism spending, transport sector energy consumption, transport sector CO2 emissions, economic growth, to international tourism revenue. There also exist bidirectional short-run lagged causality between transport sector energy consumption and international tourism revenue and bidirectional short-run lagged causality between transport sector CO2 emissions and international tourism revenue. No long-run relationships were detected among the variables. Recommendations for intervention include government subsidies, tax incentives, regulations, and transport-sector infrastructure development.