THE ECONOMIC SIGNIFICANCE OF TOURISM IN ASIA

Abstract

This study aims to observe short and long run association of selected macroeconomic variables and tourism with economic growth. This research particularly emphasizes to perform and analyze triangular Granger relationships between variables and Granger causality test under VECM. Besides tourism variables, the current research also intends to propose a few macroeconomic variables, such as, exports, human capital and physical capital as the control variables, for determining the nature of causality of these variables with economic growth. Although, limited studies are available regarding government tourism expenditure and tourism receipts under neoclassical exports and growth model however, the available empirical findings are mixed and inconclusive. The time series data of 28 years from 1989 to 2017 is used for the analysis purpose. As the economy grows, all the gross domestic product (GDP) components, such as human and physical capital, government spending, and exports also expand. With time, these variables exhibit some upward moving patterns. Tourism receipts are found to have bidirectional causality with economic growth in Thailand in the long run. Granger causality from economic growth to physical capital is also found in the short run, suggesting that Thailand should strive to achieve robust economic growth in the first place in the short run. In general, though the study does not differentiate the value of capital stock between private and public sectors, the study is able to obtain a fairly reliable measure of the trend in fixed investment in Thailand