Author
Listed:
- Kurukulasooriya Nisantha
(Department of Economics, University of Ruhuna, Matara (Sri Lanka))
- Lelwala Erandathie
(Department of Economics, University of Ruhuna, Matara (Sri Lanka))
Abstract
This study investigates the association between economic growth and tourism in Sri Lanka using cointegration analysis for the period 1980 to 2019. The analysis was performed using the Augmented Dickey-Fuller test, Phillips-Perron test, Engle-Granger cointegration, and Granger causality tests. The results revealed a long-run equilibrium relationship among variables while there is a disequilibrium in the short run. The estimated error correction term is theoretically acceptable and approximately 5 per cent yearly correction of its disequilibrium in the short run was found. Granger causality test presented a long-run unidirectional causality which is running from tourism to economic growth and thus findings confirm the tourism-led growth hypothesis in Sri Lanka tourism and development spectrum. Therefore, tourism has a significant positive impact on economic activities in the long run. Findings further emphasize that benefits of the economic development must be transferred to the further development of tourism to maintain a bilateral causality which is an important concept in this regard. It provides the rationale for the further development of productive policy strategies to attract more tourists to the country and upsurge visitor expenditures during their stay in Sri Lanka since Sri Lanka has significantly developed its accommodation capacities. Findings further reveal that the tourism sector must be developed parallel to the economic development to boost the growth through tourism. Therefore, all sectors, the government, private bodies, and voluntary organizations must become active partners in this endeavour, and policy implications need the focus of every aspect of enhancing tourism as a growth engine.
Suggested Citation
Kurukulasooriya Nisantha & Lelwala Erandathie, 2021.
"Long-Run Nexus of Tourism and Economic Growth in Sri Lanka: Empirical Evidence Using Cointegration Analysis,"
Management & Economics Research Journal, Faculty of Economics, Commercial and Management Sciences, Ziane Achour University of Djelfa, vol. 3(1), pages 25-43, March.
Handle:
RePEc:alv:journl:v:3:y:2021:i:1:p:25-43
DOI: 10.48100/merj.2021.148
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More about this item
Keywords
Tourism;
Economic Growth;
Empirical Evidence;
Sri Lanka;
All these keywords.
JEL classification:
- C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
- O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- Z32 - Other Special Topics - - Tourism Economics - - - Tourism and Development
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