Causal Relationship between Tourism and Economic Growth in Sri Lanka: Some Empirical Evidence

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Wickremasinghe, Guneratne B and Ihalanayake, Ranjith ORCID: 0000-0002-5407-203X (2007) Causal Relationship between Tourism and Economic Growth in Sri Lanka: Some Empirical Evidence. In: CAUTHE 2007 tourism - past achievements, future challenges. McDonnell, Ian, Grabowski, Simone and March, Roger, eds. Unit of Technology, Sydney, Sydney, N.S.W, pp. 742-753.


Although there are arguments that development in tourism industry leads to economic development, very few studies empirically addressed this issue. This paper investigates the issue from a developing country perspective: Sri Lanka. We use annual data from 1960 to 2000 to model the causal relationship between these two variables (tourism and economic growth) using multivariate cointegration, error-correction modelling and variance decomposition analysis. The results of the study indicate that there is a significant causal relationship from tourism receipts to gross domestic product of Sri Lanka. Therefore, economic policies should be directed to boost tourism industry so that the GDP can be increased resulting in a higher economic growth. Paper presented at the 17th Council for Australian University Tourism and Hospitality Education's (CAUTHE) annual conference, titled Tourism: Past Achievements, Future Challenges, hosted by the University of Technology, Sydney, and the University of New South Wales.

Item type Book Section
Official URL;dn=5...
ISBN 9780646469980
Subjects Historical > Faculty/School/Research Centre/Department > School of Accounting
Historical > FOR Classification > 1506 Tourism
Historical > SEO Classification > 9101 Macroeconomics
Keywords ResPubID13905 tourism, economic development, cointegration, Sri Lanka, error-correction model, variance decomposition
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