Tourism Expansion and Economic Growth in Asia-Pacific Nations: A Panel Causality Approach

Abstract

The aim of the present study is to investigate the causal nexus between tourism expansion and economic growth for the panel of 13 selected Asia-Pacific nations over the period 1995-2014. Using econometric techniques like tests for panel unit root, panel cointegration and Panel Vector Autoregressive (PVAR) model by means of Arellano and Bond (1991) Generalized Method of Moments (GMM) estimation, the results show that there is no long-run relationship between tourism expansion and economic growth for the selected Asia-Pacific nations. Besides, the results of PVAR-GMM estimation show that tourism expansion and economic growth are independent of each other in the short run and also do not validate either tourismled growth hypothesis or growth-led tourism hypothesis for the sample nations. The results suggest that the governments of the selected Asia-Pacific countries should give more importance to economic policies to promote economic growth more than paying attention towards promoting inbound tourism in the region.