The Relation between Tourism and Economic Growth: A Case of Saudi Arabia as an Emerging Tourism Destination
DOI:
https://doi.org/10.34021/ve.2020.03.04(2)Keywords:
tourism, economic growth, time series, vector autoregressive, granger causalityAbstract
This paper examines empirically the relation between tourism and economic growth in Saudi Arabia. The authors try to justify how tourism contributes to the economic growth of Saudi Arabia. There are applied descriptive statistics, unit root test, VAR model and Granger Causality test as an econometric methodology to examine the connection between tourism and economic growth in Saudi Arabia for the annual data in the period from 1990 to 2018. The main empirical results of the study find out that tourism affects positively the economic growth in Saudi Arabia. Also, there is found a positive nexus among tourism and economic growth. Furthermore, CO2 emissions and financial development impact positively the tourism sector, while trade openness predicts a negative effect on tourism. Additionally, CO2 emissions, financial development, and trade openness have a positive impact on economic growth in Saudi Arabia. Finally, the Granger causality test provides evidence of bidirectional nexus between tourism and economic growth in Saudi Arabia. This paper contributes to the current research by explaining the causal nexus among tourism and economic growth in Saudi Arabia during the period from 1990 to 2018, applying a vector autoregressive model and Granger Causality.
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References
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Brau, R., Lanza, A., & Pigliaru, F. (2007). How fast are small tourism countries growing? Evidence from the data for 1980–2003. Tourism Economics, 13(4), 603–613.
Brida, J.G., Cortes-Jimenez, I., & Pulina, M. (2016). Has the tourism-led growth hypothesis been validated? A literature reviews. Current Issues in Tourism, 19(5), 394–430.
Chiu, Y.B., & Yeh, L.T. (2017). The threshold effects of the tourism-led growth hypothesis: Evidence from a cross-sectional model. Journal of Travel Research, 56(5), 625–637.
Clarke, G.D., & Hoaas, D.J. (2007). Festival economics: The case of the Red River Revel. Tourism Economics, 13(1), 163–175.
Croes, R. (2013). Tourism specialization and economic output in small island destinations. Tourism Review, 68(4), 34–48.
Croes, R., & Vanegas, M., (2008). Cointegration and causality between tourism and poverty reduction. Journal of Travel Research, 47, 94–103.
Daniels, M.J., Norman, W.C., & Henry, M.S. (2004). Estimating income effects of a sport tourism event. Annals of Tourism Research, 31(1), 180–199.
Dredge, D. (2004). Development, economy and culture: Cultural heritage tourism planning, Liangzhu, China. Asia Pacific Journal of Tourism Research, 9(4), 405–422.
Dritsakis, N. (2004). Tourism as a long-run economic growth factor: An empirical investigation for Greece using causality analysis. Tourism Economics, 10(3), 305–316.
Durbarry, R. (2004). Tourism and economic growth: The case of Mauritius. Tourism Economics, 10(4), 389–401.
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Katircioglu, S. (2009). Testing the tourism-led growth hypothesis: The case of Malta. Acta Oeconomica, 59(3), 331–343.
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Kulendran, N., & Wilson, K. (2000). Is there a relationship between international trade and international travel? Applied Economics, 32, 1001–1009.
Kumar, R.R., & Kumar, R. (2012). Exploring the nexus between information and communications technology, tourism and growth in Fiji. Tourism Economics, 18(2), 359–371.
Lanza, A., Temple, P., & Urga, G. (2003). The implications of tourism specialisation in the long run: An econometric analysis for 13 OECD economies. Tourism Management, 24, 315–321.
Lee, C.C., & Chang, C.P. (2008). Tourism development and economic growth: A closer look to panels. Tourism Management, 29, 80–192.
Letunovska, N., Kwilinski, A., & Kaminska, B. (2020). Scientific Research in the Health Tourism Market: A Systematic Literature Review. Health Economics and Management Review, 1, 8-19. https://doi.org/10.21272/hem.2020.1-01
Li, S.N., & Jago, L. (2013). Evaluating economic impacts of major sports events - A meta-analysis of the key trends. Current Issues in Tourism, 16(6), 591–611.
Liu, H., & Song, H. (2018). New evidence of dynamic links between tourism and economic growth based on mixed-frequency Granger causality tests. Journal of Travel Research, 57(7), 899–907.
Ma, X.L., Bao, J.G., & Ryan, C. (2009). Evaluating the total factor productivity growth of national parks in China with data enveloped analysis. Asia Pacific Journal of Tourism Research, 14(4), 385–402.
Manzoor, F., Wei, L., & Asif, M. (2019). The contribution of sustainable tourism to economic growth and employment in Pakistan. International Journal of Environmental Research and Public Health, 16(3785), 1-14.
Marin, D. (1992). Is the Export-led Hypothesis Valid for Industrialised Countries? Review of Economics and Statistics, Vol. 74, pp. 678–688.
Mayer, M. (2014). Can nature-based tourism benefits compensate for the costs of national parks? A study of the Bavarian Forest National Park, Germany. Journal of Sustainable Tourism, 22(4), 561–583.
Mishra, P.K., Rout, H.B., & Mohapatra, S.S. (2011). Causality between tourism and economic growth: Empirical evidence from India. European Journal of Social Sciences, 18(4), 518-527.
Oh, C.O. (2005). The contribution of tourism development to economic growth in the Korean economy. Tourism Management, 26, 39–44.
Park, D.B., Lee, H.J., & Yoon, Y.S. (2014). Understanding the benefit sought by rural tourists and accommodation preferences: A South Korea case. International Journal of Tourism Research, 16(3), 291–302.
Perez-Dacal, D., Pena-Boquete, Y., & Fernandez, M. (2014). A measuring tourism specialization: A composite indicator for the Spanish regions. Journal of tourism, culture and territorial development, 5(9), 53–73.
Po, W. C., & Huang, B. N. (2008). Tourism development and economic growth: a nonlinear approach. Physica A: Statistical Mechanics and its Applications, 387(22), 5535-5542.
Ridderstaat, J., Croes, R., & Nijkamp, P. (2014). Tourism and long-run economic growth in Aruba. International Journal of Tourism Research, 16(5), 472–487.
Saayman, A., Saayman, M., & Gyekye, A. (2014). Perspectives on the regional economic value of a pilgrimage. International Journal of Tourism Research, 16(4), 407–414.
Saayman, M., & Rossouw, R. (2011). The significance of festivals to regional economies: measuring the economic value of Grahamstown National Arts Festival in South Africa. Tourism Economics, 17(3), 603–624.
Saayman, M., & Saayman, A. (2006). Estimating the economic contribution of visitor spending in the Kruger National Park to the regional economy. Journal of Sustainable Tourism, 14(1), 67–81.
Salifou, C.K., & Haq, I.U. (2017). Tourism, globalization and economic growth: A panel cointegration analysis for selected West African states. Current Issues in Tourism, 20(6), 664–667.
Shahzad, S.J.H., Shahbaz, M., Ferrer, R., & Kumar, R.R. (2017). Tourism-led growth hypothesis in the top ten tourist destinations: New evidence using the quantile-on-quantile approach. Tourism Management, 60, 223–232.
Shan, J., & Wilson, K. (2001). Causality between trade and tourism: empirical evidence from China. Applied Economic Letters, 8, 279–283.
Song, H., Dwyer, L., Li, G., & Cao, Z. (2012). Tourism economics research: A review and assessment. Annals of Tourism Research, 39(3), 1653–1682.
Song, H., Qiu, R.T., & Park, J. (2019). A review of research on tourism demand forecasting. Annals of Tourism Research, 75, 338–362.
Tang, H.C.H., & Jang, S.S.C. (2009). The tourism-economy causality in the United States: A sub-industry level examination. Tourism Management, 30, 553–558.
Theerapappisit, P. (2009). Pro-poor ethnic tourism in the Mekong: A study of three approaches in Northern Thailand. Asia Pacific Journal of Tourism Research, 14(2), 201–221.
Thornton, J. (1997). Exports and economic growth: Evidence from 19th Century Europe. Europe Economics Letters, 55, 235–240.
Wan, Y.K.P. (2012). The social, economic and environmental impacts of casino gaming in Macao: The community leader perspective. Journal of Sustainable Tourism, 20(5), 737–755.
Wu, D.C., Song, H., & Shen, S. (2017). New developments in tourism and hotel demand modeling and forecasting. International Journal of Contemporary Hospitality Management, 29(1), 507–529.
Xu, X. (1996). On the causality between export growth and GDP growth: An empirical reinvestigation. Review of International Economics, 4, 172–184.
Algieri, B. (2006). An econometric estimation of the demand for tourism: The case of Russia. Tourism Economics, 12(1), 5–20.
Bahmani-Oskooee, M., & Alse, J. (1993). Export growth and economic growth: an application of co-integration and error correction modeling. The Journal of Developing Areas, 27, 535–542.
Balaguer, J., & Cantavella-Jorda, M. (2002). Tourism as a long-run economic growth factor: The Spanish case. Applied Economics, 34(7), pp. 877–884.
Belloumi, M. (2010). The relationship between tourism receipts, real effective exchange rate and economic growth in Tunisia. International Journal of Tourism Research, 12(5), 550–560.
Benar, H., & Jenkins, G.P. (2008). The economics of regulation and taxation policies for casino tourism. Tourism Economics, 14(3), 483–510.
Bilen, M., Yilanci, V., & Eryuzlu, H. (2017). Tourism development and economic growth: A panel Granger causality analysis in the frequency domain. Current Issues in Tourism, 20(1), 27–32.
Brau, R., Lanza, A., & Pigliaru, F. (2007). How fast are small tourism countries growing? Evidence from the data for 1980–2003. Tourism Economics, 13(4), 603–613.
Brida, J.G., Cortes-Jimenez, I., & Pulina, M. (2016). Has the tourism-led growth hypothesis been validated? A literature reviews. Current Issues in Tourism, 19(5), 394–430.
Chiu, Y.B., & Yeh, L.T. (2017). The threshold effects of the tourism-led growth hypothesis: Evidence from a cross-sectional model. Journal of Travel Research, 56(5), 625–637.
Clarke, G.D., & Hoaas, D.J. (2007). Festival economics: The case of the Red River Revel. Tourism Economics, 13(1), 163–175.
Croes, R. (2013). Tourism specialization and economic output in small island destinations. Tourism Review, 68(4), 34–48.
Croes, R., & Vanegas, M., (2008). Cointegration and causality between tourism and poverty reduction. Journal of Travel Research, 47, 94–103.
Daniels, M.J., Norman, W.C., & Henry, M.S. (2004). Estimating income effects of a sport tourism event. Annals of Tourism Research, 31(1), 180–199.
Dredge, D. (2004). Development, economy and culture: Cultural heritage tourism planning, Liangzhu, China. Asia Pacific Journal of Tourism Research, 9(4), 405–422.
Dritsakis, N. (2004). Tourism as a long-run economic growth factor: An empirical investigation for Greece using causality analysis. Tourism Economics, 10(3), 305–316.
Durbarry, R. (2004). Tourism and economic growth: The case of Mauritius. Tourism Economics, 10(4), 389–401.
Fleischer, A., & Tchetchik, A. (2005). Does rural tourism benefit from agriculture? Tourism Management, 26(4), 493–501.
Hanly, P.A. (2012). Measuring the economic contribution of the international association conference market: An Irish case study. Tourism Management, 33(6), 1574–1582.
Holzner, M. (2011). Tourism and economic development: The beach disease? Tourism Management, 32(4), 922–933.
Jin, J.C. (1995). Export-led growth and four little dragons. Journal of International Trade and Economic Development, 4, 203–215.
Karimi, M. S. (2018). The Linkage between Tourism Development and Economic Growth in Malaysia: A Nonlinear Approach. International Economic Journal, 32(1), 53- 65.
Katircioglu, S. (2009). Testing the tourism-led growth hypothesis: The case of Malta. Acta Oeconomica, 59(3), 331–343.
Kharazishvili, Y., Kwilinski, A., Grishnova, O., & Dzwigol, H. (2020). Social Safety of Society for Developing Countries to Meet Sustainable Development Standards: Indicators, Level, Strategic Benchmarks (with Calculations Based on the Case Study of Ukraine). Sustainability, 12(21), 8953. https://doi.org/10.3390/su12218953
Kim, H.J., Chen, M.H., & Jang, S. (2006). Tourism expansion and economic development: The case of Taiwan. Tourism Management, 27(5), 925–933.
Kulendran, N., & Wilson, K. (2000). Is there a relationship between international trade and international travel? Applied Economics, 32, 1001–1009.
Kumar, R.R., & Kumar, R. (2012). Exploring the nexus between information and communications technology, tourism and growth in Fiji. Tourism Economics, 18(2), 359–371.
Lanza, A., Temple, P., & Urga, G. (2003). The implications of tourism specialisation in the long run: An econometric analysis for 13 OECD economies. Tourism Management, 24, 315–321.
Lee, C.C., & Chang, C.P. (2008). Tourism development and economic growth: A closer look to panels. Tourism Management, 29, 80–192.
Letunovska, N., Kwilinski, A., & Kaminska, B. (2020). Scientific Research in the Health Tourism Market: A Systematic Literature Review. Health Economics and Management Review, 1, 8-19. https://doi.org/10.21272/hem.2020.1-01
Li, S.N., & Jago, L. (2013). Evaluating economic impacts of major sports events - A meta-analysis of the key trends. Current Issues in Tourism, 16(6), 591–611.
Liu, H., & Song, H. (2018). New evidence of dynamic links between tourism and economic growth based on mixed-frequency Granger causality tests. Journal of Travel Research, 57(7), 899–907.
Ma, X.L., Bao, J.G., & Ryan, C. (2009). Evaluating the total factor productivity growth of national parks in China with data enveloped analysis. Asia Pacific Journal of Tourism Research, 14(4), 385–402.
Manzoor, F., Wei, L., & Asif, M. (2019). The contribution of sustainable tourism to economic growth and employment in Pakistan. International Journal of Environmental Research and Public Health, 16(3785), 1-14.
Marin, D. (1992). Is the Export-led Hypothesis Valid for Industrialised Countries? Review of Economics and Statistics, Vol. 74, pp. 678–688.
Mayer, M. (2014). Can nature-based tourism benefits compensate for the costs of national parks? A study of the Bavarian Forest National Park, Germany. Journal of Sustainable Tourism, 22(4), 561–583.
Mishra, P.K., Rout, H.B., & Mohapatra, S.S. (2011). Causality between tourism and economic growth: Empirical evidence from India. European Journal of Social Sciences, 18(4), 518-527.
Oh, C.O. (2005). The contribution of tourism development to economic growth in the Korean economy. Tourism Management, 26, 39–44.
Park, D.B., Lee, H.J., & Yoon, Y.S. (2014). Understanding the benefit sought by rural tourists and accommodation preferences: A South Korea case. International Journal of Tourism Research, 16(3), 291–302.
Perez-Dacal, D., Pena-Boquete, Y., & Fernandez, M. (2014). A measuring tourism specialization: A composite indicator for the Spanish regions. Journal of tourism, culture and territorial development, 5(9), 53–73.
Po, W. C., & Huang, B. N. (2008). Tourism development and economic growth: a nonlinear approach. Physica A: Statistical Mechanics and its Applications, 387(22), 5535-5542.
Ridderstaat, J., Croes, R., & Nijkamp, P. (2014). Tourism and long-run economic growth in Aruba. International Journal of Tourism Research, 16(5), 472–487.
Saayman, A., Saayman, M., & Gyekye, A. (2014). Perspectives on the regional economic value of a pilgrimage. International Journal of Tourism Research, 16(4), 407–414.
Saayman, M., & Rossouw, R. (2011). The significance of festivals to regional economies: measuring the economic value of Grahamstown National Arts Festival in South Africa. Tourism Economics, 17(3), 603–624.
Saayman, M., & Saayman, A. (2006). Estimating the economic contribution of visitor spending in the Kruger National Park to the regional economy. Journal of Sustainable Tourism, 14(1), 67–81.
Salifou, C.K., & Haq, I.U. (2017). Tourism, globalization and economic growth: A panel cointegration analysis for selected West African states. Current Issues in Tourism, 20(6), 664–667.
Shahzad, S.J.H., Shahbaz, M., Ferrer, R., & Kumar, R.R. (2017). Tourism-led growth hypothesis in the top ten tourist destinations: New evidence using the quantile-on-quantile approach. Tourism Management, 60, 223–232.
Shan, J., & Wilson, K. (2001). Causality between trade and tourism: empirical evidence from China. Applied Economic Letters, 8, 279–283.
Song, H., Dwyer, L., Li, G., & Cao, Z. (2012). Tourism economics research: A review and assessment. Annals of Tourism Research, 39(3), 1653–1682.
Song, H., Qiu, R.T., & Park, J. (2019). A review of research on tourism demand forecasting. Annals of Tourism Research, 75, 338–362.
Tang, H.C.H., & Jang, S.S.C. (2009). The tourism-economy causality in the United States: A sub-industry level examination. Tourism Management, 30, 553–558.
Theerapappisit, P. (2009). Pro-poor ethnic tourism in the Mekong: A study of three approaches in Northern Thailand. Asia Pacific Journal of Tourism Research, 14(2), 201–221.
Thornton, J. (1997). Exports and economic growth: Evidence from 19th Century Europe. Europe Economics Letters, 55, 235–240.
Wan, Y.K.P. (2012). The social, economic and environmental impacts of casino gaming in Macao: The community leader perspective. Journal of Sustainable Tourism, 20(5), 737–755.
Wu, D.C., Song, H., & Shen, S. (2017). New developments in tourism and hotel demand modeling and forecasting. International Journal of Contemporary Hospitality Management, 29(1), 507–529.
Xu, X. (1996). On the causality between export growth and GDP growth: An empirical reinvestigation. Review of International Economics, 4, 172–184.
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Published
2020-10-31
How to Cite
Jamel, L. (2020). The Relation between Tourism and Economic Growth: A Case of Saudi Arabia as an Emerging Tourism Destination. Virtual Economics, 3(4), 29–47. https://doi.org/10.34021/ve.2020.03.04(2)
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