Tourism-led Growth Research Articles

Nonlinear effect of tourism on economic growth: evidence from Papua New Guinea

ABSTRACT In this paper, we examine asymmetric effects of tourism on economic growth in Papua New Guinea (PNG) using quarterly data from 2008Q1 to 2019Q4 (n = 48). The asymmetric nonlinear autoregressive distributed lag (NARDL) model is utilized for this purpose. Causality testing is conducted with an asymmetric VAR model. Estimates from the NARDL model reveal that periods of tourism expansion are positively associated with economic growth. Negative shocks of tourism have an insignificant effect on economic growth. The estimates provide some support for the tourism-led growth hypothesis but only for tourism expansions confirming the asymmetric relationship.

Fresh insights into tourism-led economic growth nexus: a systematic literature network analysis approach

ABSTRACT Using over 200 empirical studies curated from web of science (WoS) and Scopus databases, the current study employed systematic literature network (i.e. systematic review and bibliometric) analysis to document the evolution of tourism-led economic growth literature. Specifically, the study answered four key research questions validating the most influential contributors, key themes in tourism-growth nexus, intellectual networks and critical signposts for future research engagements. Beyond its contribution in answering the aforementioned questions, this study also offered crucial recommendations to policymakers for generating alternative path(s) to economic growth.

Nexus of tourism demand, economic growth, and external competitiveness in leading tourist destination countries

The study investigates the causal relationship between tourism demand, economic growth, and external competitiveness in leading tourist destination countries using the bootstrap panel Granger causality test between 2005 and 2019. To determine the direction and the sign of the causality, study first test the existence of cross-sectional dependence among the countries and slope homogeneity across the countries. The empirical findings of the study produced varying results for countries reflecting the heterogeneity among the sample countries. Results also provide evidence of tourism-led growth, economic-driven tourism growth, feedback, and neutrality hypotheses. Moreover, results show evidence of tourism induced external competitiveness and vice-versa. Therefore, even though the study's empirical results have a significant implication for policymakers, regulators, and sector representatives. It is not fair to suggest one size fits all policies for the sample countries.

The Validity of Tourism-led Growth Hypothesis for The Top Ten Tourism Revenue Generating Countries

This study aims to test the validity of the tourism-led growth hypothesis. For this purpose, ten countries with the highest tourism income (USA, China, Australia, France, Italy, England, Spain, Germany, Japan, Thailand) are included in the analysis covering the period 1995-2018. Pedroni cointegration, panel Dynamic Ordinary Least Square (DOLS) and panel Fully Modified Ordinary Least Square (FMOLS) methods are utilized by using economic growth, tourism revenues and exchange rate series. According to panel DOLS and panel FMOLS test results, tourism revenues and exchange rate have a positive effect on economic growth. Furthermore, Granger causality analysis findings indicate a uni-directional causal relation from tourism revenues to economic growth and from exchange rate to tourism. The overall results of the empirical analysis verify the tourism-led growth hypothesis for the ten countries with the highest tourism income.

The Mediating Effects of Implied Volatility and Exchange Rate on the U.S. Tourism-Growth Nexus

In this paper, we examine the impact of destination risk and currency valuation on the U.S. tourism-growth nexus using the recently developed nonlinear autoregressive distributed lag cointegration technique. Tourism development is proxied by tourist arrivals, while growth is measured by real GDP. Empirical results show evidence of long-run asymmetric bidirectional causality. Positive shocks in tourism development directly impact growth, while negative shocks in GDP have a negative causal effect on tourism. This latter finding, which supports the growth-led tourism hypothesis, suggests that in the long run, tourism tends to improve following periods of economic weakness, perhaps due to the dollar’s weakness at such times. However, we have evidence only of unidirectional causality running from GDP to tourism in the short run. An important implication of these findings is the need to promote inbound tourism, especially when weakness in the U.S. economy is accompanied by a decline in the value of the dollar.

Does tourism development, energy consumption, trade openness and economic growth matters for ecological footprint: Testing the Environmental Kuznets Curve and pollution haven hypothesis for Pakistan

The present study investigates the Environmental Kuznets Curve relationship between travel and tourism and ecological footprint in Pakistan over the period 1980–2017. For this purpose, the impact of tourism development, economic growth, energy consumption, trade openness and foreign direct investments on ecological footprint is empirically examined within the EKC framework. The ARDL bounds and Bayer and Hanck tests indicate that variables in this study have long-term cointegration. Results revealed a tourism-led growth hypothesis and an inverted U-shaped relationship between travel and tourism and ecological footprint in Pakistan. The ARDL and Toda-Yamamoto non-causality results also reveal that energy use and trade openness are at the cost of ecological footprint. Moreover, inflow of foreign direct investment also adds environmental degradation and support pollution haven hypothesis. Thus, sustainable tourism, fuel mix variation and services sector oriented foreign direct investment should be the target of policymakers.

Arrivederci! An Analysis of Tourism Impact in the Italian Provinces

ABSTRACT Benefits of rapid tourism development are widely welcomed by governments of many destinations, with a growing body of literature confirming the existence of a connection between tourism and economic growth in several countries across the world. However, even if sub-national studies are deemed relevant, they are still scarce: we fill this gap by verifying if and how the tourism-led and economic-led growth hypotheses affect Italian provinces. Main findings reveal that in about one fifth of Italian provinces the two hypotheses hold, with a decreasing marginal contribution of the tourism to the economic growth once it reaches a certain threshold. Therefore, it is possible to use tourism to support economies, even if discrepancies are foreseeable among territories.

Towards the quest to reduce income inequality in Africa: is there a synergy between tourism development and governance?

ABSTRACT Despite the growing attention on the tourism development-income inequality nexus, a conspicuous gap in the literature is that rigorous empirical works examining how good governance moderates the relationship are hard to find. Anchoring on the trickle-down theory and the tourism-led growth hypothesis, this study fills this void in the literature based on data for 48 African countries for the period 1996–2020. We provide strong evidence robust to several specifications from the GMM estimator to show that, though unconditionally both tourism development and governance reduce income inequality in Africa, the effect of the former is amplified in the presence of good economic, political and institutional governance. Particularly, we find that control of corruption and political stability are keys for propelling Africa’s tourism sector to contribute to the equalization of incomes across the continent. Policy recommendations are provided in line with SDG 10, and Aspirations 1 and 3 of Africa’s Agenda 2063.

Impact of Tourism on Economic Growth of Nepal: Is Tourism-Led Growth Hypothesis Valid for Nepal?

A voluminous study is available on tourism-growth nexus as tourism industry received considerable attention as a potential source of economic growth. This paper empirically examines the impact of tourism on economic growth of Nepal by using time series data of 1976-2020 and applying autoregressive distributed lag (ARDL) approach. Real GDP was used as proxy measure of economic growth, which was the outcome variable whereas the variable of interest was tourism receipts. Foreign aid, total volume of trade and ratio of government consumption expenditure to GDP were taken as control variables. The result of ARDL model shows that tourism has no significant impact on economic growth of Nepal in both short-run and long-run. However, total volume of trade has positive and significant effect on economic growth in short-run whereas foreign aid, total volume of trade and ratio of government consumption expenditure to GDP have positive and significant effect on economic growth in the long-run. In such context of tourism and growth relationship, tourism-led growth hypothesis is rejected for Nepal.

The nexus between tourism and regional real growth: dynamic panel threshold testing

This study analyzes the nexus between tourism and regional real growth for European regions at the Nomenclature of territorial units for statistics (NUTS), level 2, for the period 1995-2019. The study uses the dynamic panel threshold model to analyze complex relations between variables. As the dependent variable, we chose real growth rate of regional gross value added at basic prices by NUTS 2 regions. The independent variable is regional arrivals at tourist accommodation, while the control variables are health, household income, and employment at NUTS 2 regional level. The study found the threshold variable for 95% confidence interval. The marginal effects in the low inflation regime are higher compared to marginal effects in the high inflation regime. The study results support tourism-led growth hypothesis, indicating tourism as a one of the main drivers of regional growth. This research contributes to rare literature in application of dynamic panel threshold model in tourism. As an implication, this study can be used as a methodological approach to analyze the impact of different variables (not only tourism, but also innovations, technology, well-being, etc.) on regional growth, especially in countries with high regional differences, such as the Commonwealth of Independent States (CIS), Latin America, etc.

EVALUATING THE ROLE OF TOURISM IN THE ECONOMIC DEVELOPMENT OF THE REPUBLIC OF ARMENIA AND OTHER MEMBER STATES OF THE EURASIAN ECONOMIC UNION

Tourism has a significant role in the economies of many countries. It creates jobs, brings money, promotes investments, decreases poverty, develops infrastructures, etc. Many research works try to evaluate the role of tourism development on the economy. The article evaluates the role of tourism development in the economy of Armenia and checks the Tourism-Led Growth Hypothesis (TLGH). With the help of statistical methods, the article evaluates the connections between tourism total expenses (visitor exports, domestic spending, government spending, and capital investment), the number of tourists and tourism total contribution to GDP, employment and other indicators. Besides, the correlation analysis between these indicators was done for the Member States of the Eurasian Economic Union. The results show that the increase in tourism expenses and the number of tourists will increase GDP and employment. However, the change in tourism contribution to employment is not so high, which was explained by different reasons. The same is the case for other countries of the Eurasian Economic Union. The article results may be helpful for future studies, as well as for government agencies for evaluating tourism contribution to economic development and for elaborating tourism development policies.

Validity of tourism-led growth hypothesis in Asia: new insight from a heterogeneous income group analysis

The paper investigates the validity of tourism-led growth hypothesis in 37 Asia economies with annual time series data spanning between 1995 and 2018. The region was disaggregated into three income groups (high-income economies, upper middle-income economies, and lower middle-income economies) respectively. In different sublets, the outcome of tourism receipts was positive and significant on economic growth for high income economies and lower middle-income economies respectively. Also, tourism expenditures appeared significant in high-income economies only. Overall, tourism-led growth hypothesis is valid in all the income classifications. Therefore, it is recommended that Asian economies across the income groups respectively should advance more policies that will stimulate sustainable economic growth. Second, policymakers in the upper middle-income countries should strengthen the link between the tourism industry and sustainable economic growth by building strong governance framework for proper accountability and remittance.

Validity of tourism-led growth hypothesis in Asia: new insight from a heterogeneous income group analysis

Validity of tourism-led growth hypothesis in Asia: new insight from a heterogeneous income group analysis

THE TOURISM-LED GROWTH HYPOTHESIS IN TRANSITION ECONOMIES? EMPIRICAL EVIDENCE FROM A PANEL DATA ANALYSIS

Tourism has been considered as a potential factor in development strategy in many developed and developing countries worldwide. Besides, tourism is really a key economic sector in some countries. This study aims to examine the tourism-led growth hypothesis for some transition countries, which includes seven high growth economies Bulgaria, Hungary, Poland, Romania, Russia, Ukraine and Vietnam. The research database is collected by an annual form in the period of 1995-2019. These economies are considered successful transitional cases in the global economy, however, the tourism-led growth hypothesis in these countries has been received only a little evidence from academics in recent years. The Johansen-Fisher test and the OLS estimation are applied in the quantitative process. There are some new findings from the empirical results. First, the Johansen-Fisher test confirms the existence of long-run cointegration relationships between tourism (denoted by the tourism revenue and the tourism arrivals) and economic growth in the panel data sample of countries. Second, the long-run coefficients of the tourism variables are positive and significant that concludes the tourism-led growth hypothesis in these transition countries. The contribution of the study is not only to fill the empirical research gap by the estimated results from a group of transition economies but also to confirms the tourism-led growth platform as an efficient development strategy for other developing countries. Furthermore, our study suggests some policy implications for policymakers to use tourism as a key development sector in these countries in the future.

International Tourism and Economic Growth: Empirical Evidence from BRICS Countries

The aim of the study was to examine the tourism-growth nexus in the context of BRICS nations. For this purpose, the augmented neo-classical growth framework has been employed a panel data model approach over the sample period spanning from 1995 to 2019. The estimation was conducted using PMG based ARDL regression. The results lend support to the tourism-led growth hypothesis when the capital formation and human development exert a positive impact on the long-run real economic growth in BRICS economies. So, the policies meant for tourism sector development can contribute to long-run economic growth through an increase in the share of gross capital formation in the gross domestic product and with the help of improved human development. Therefore, the policy focus should be on infrastructure development, the promotion of investment opportunities, and the development of healthcare and education in BRICS countries. The use of a macroeconomic framework in the analysis is the novelty of this study.

Tourism Development and Economic Growth in BIMP-EAGA: A Conceptualization with Panel Data Evidence

ABSTRACT The tourism–growth nexus within the subregional economic group comprising Brunei, Indonesia, Malaysia, and the Philippines has been virtually unexplored with respect to the exchange rate. The baseline hypotheses are growth-led tourism and tourism-led growth, whereby a model is conceptualized with respect to international prices and exchange rates. Data for the 2004–2018 period are analyzed using error corrections, causality, and panel cointegrating regressions with the consideration of cross-sectional dependence using state-of-the-art empirical methods. Significant findings, aided by a conducive exchange rate, favor the tourism-led growth hypothesis. The exchange rate is determined to be a crucial reason for divergence from and convergence toward the long-run equilibrium. The depreciation of the exchange rate appears to be the major factor supporting a sustainable tourism-led growth performance; hence, spillover effects are also expected to other countries in the Association of Southeast Asia Nations.

Comparing shopping experiences in department stores and street markets: a big data analysis of TripAdvisor reviews

PurposeBased on big data analytical and statistical techniques, this study aims to examine tourists’ shopping experiences at department stores and street markets in Phuket.Design/methodology/approachA Naïve Bayes machine learning algorithm was used to identify the most frequently used terms in TripAdvisor reviews of both department stores and street markets contributed by the same pool of 729 tourists.FindingsA total of 18 out of 62 terms used were common in reviews of both shopping settings. However, the study found significant differences in the mean use of the 18 common terms and the likelihood of those terms being used in overall positive reviews.Practical implicationsThe study’s findings indicate differences in tourist shopping experiences at department stores and street markets. Several concrete recommendations are made, including a greater focus on the linkage to the national characteristic of street markets, and particularly the quality of local fruit, to enhance the tourist shopping experience.Originality/valueUnderstanding the differences between shopping malls and street markets from the tourist’s perspective would further enhance the coexistence of shopping malls and street markets in tourism-led growth cities. As such, using reviews of both shopping malls and street markets from an identical pool of tourists, the present study will analyse and compare tourists’ actual shopping experiences, thereby addressing this gap in the research canon via integrated statistical and big data analysis techniques.

Publication bias and the tourism-led growth hypothesis.

This study attempts to solve the publication bias suggested by recent review articles in the tourism-growth literature. Publication bias is the tendency to report favourable and significant results. Method and data triangulation, and the Solow-Swan model are applied. A sample from 1995 to 2018 is considered with Tonga as a case study. The approach consists of multiple methods, data frequencies, exchange rates, structural breaks, and an overall tourism index developed using principal component analysis (PCA). Consistent results across these dimensions are obtained with the PCA models. Tourism has small, positive, and statistically significant economic growth effects. Theoretically consistent values of the capital share and exchange rates are obtained. The results indicate the importance of multiple methods and the overall tourism index in assessing the tourism-growth relationship and minimising publication biases. The practical implication is the provision of robust elasticity estimates and better economic policies.

Asymmetric effects of China’s tourism on the economy at the city level: a moderating role of spatial disparities in top level tourist attractions

ABSTRACT This study complements the tourism literature by proposing an asymmetrical effect of the tourism-led growth hypothesis on the city-level economy using panel data from 331 cities in China from 2004 to 2015 (3,972 observations). The results, based on an augmented Solow model and the system-generalized method of moments (GMM), reveal that the impact of tourism on city-level economic growth is indeed asymmetric and heterogeneous, depending on the presence of top-level attractions (TL), which are proxied by the World Heritage Sites or AAAAA (5A) scenic spots. The dynamic panel threshold model’s results also corroborate the asymmetric threshold effect of tourism on city-level economic growth. Tourism, in particular, has facilitated positive and significant economic growth in cities with TL but has had an uncertain and statistically insignificant impact on cities without it. The findings indicate that the validity of tourism-led growth depends on the availability and number of TL in each city, which serve as a moderator. As a result, we confirm tourism’s asymmetric effect and spatial heterogeneity on urban economic growth.

DOES INTERNATIONAL TOURISM PROMOTE ECONOMIC GROWTH? SOME EVIDENCE FROM INDONESIA

Realizing an increasing contribution of the tourism sector to global economies, this study intends to enrich the existing tourism literature by empirically exploring the short- and long-run dynamic causalities between tourism and economic growth in Indonesia over the period 1995 to 2017. For these purposes, cointegration, Fully Modified Least Squares (FMOLS), and Granger causality techniques are adopted. The study found a cointegration between tourism and economic growth, indicating the existence of a long-run relationship between the tourism sector and economic growth. In the long-run, tourism has contributed to the promotion of economic growth. Finally, both in the short- and long-run, the study found a unidirectional causal relationship running from tourism to economic growth, confirming the tourism-led growth hypothesis. To enhance Indonesia's economic growth, the tourism sector should be further promoted by making it more attractive, supported by advanced IT facilities, warm hospitality, and diversified tourism objects.