Tourism Development and Economic Growth in Developing Countries

The International Journal of Business and Finance Research, Vol. 6, No. 1, pp. 61-63, 2012

13 Pages Posted: 6 Jan 2012

See all articles by E. M. Ekanayake

E. M. Ekanayake

Bethune-Cookman University

Aubrey E. Long

Bethune-Cookman University

Date Written: 2012

Abstract

The objective of this study is to investigate the relationships between tourism development and economic growth in developing countries using the newly developed heterogeneous panel co-integration technique. This study examines the causal relationship between tourism development and economic growth using Granger causality tests in a multivariate model and using the annual data for the 1995–2009 period. The study finds no evidence to support the tourism-led growth hypothesis. The results of the FMOLS show that, though the elasticity of tourism revenue with respect to real GDP is not statistically significant for all regions, its positive sign indicates that tourism revenue makes a positive contribution to economic growth in developing countries. The results of the study suggest that governments of developing countries should focus on economic policies to promote tourism as a potential source of economic growth.

Keywords: tourism, economic growth, panel cointegration, causality

JEL Classification: F43, L83, O40

Suggested Citation

Ekanayake, E. M. and Long, Aubrey E., Tourism Development and Economic Growth in Developing Countries (2012). The International Journal of Business and Finance Research, Vol. 6, No. 1, pp. 61-63, 2012, Available at SSRN: https://ssrn.com/abstract=1948704

E. M. Ekanayake (Contact Author)

Bethune-Cookman University ( email )

Aubrey E. Long

Bethune-Cookman University ( email )

640 Mary McLeod Bethune Blvd.
Dayton Beach, FL 32114-3099
United States

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