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Tourism and Economic Growth in South Africa: Evidence from Linear and Nonlinear Cointegration Frameworks

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  • Andrew Phiri

    (NorthWest University, South Africa)

Abstract

Tourism is increasingly being recognized as an essential component of economic growth in South Africa. The purpose of this study is to examine cointegration and causal effects between tourism and economic growth in South Africa for annual data collected between 1995 and 2014. To this end, the paper contrasts two empirical approaches; (1) Engle and Granger (1987) linear cointegration framework, and (2) Enders and Granger (1998) nonlinear cointegration framework. Furthermore, two empirical measures of tourism development are used in the study, namely; tourist receipts and number of international tourist arrivals. The empirical results of the linear framework supports the tourism-led growth hypothesis when tourist receipts are used as a measure of tourismdevelopment.However, the nonlinear framework depicts bi-directional causality between tourist receipts and economic growth. Also, the linear framework supports the economic growth-driven-tourism-hypothesis for tourist arrivals whereas the nonlinear framework depicts no causality between tourist arrivals and economic growth.

Suggested Citation

  • Andrew Phiri, 2016. "Tourism and Economic Growth in South Africa: Evidence from Linear and Nonlinear Cointegration Frameworks," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 14(1 (Spring), pages 31-53.
    • Handle: RePEc:mgt:youmgt:v:14:y:2016:i:1:p:31-53
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    More about this item

    Keywords

    tourism receipts; tourist arrivals; economic growth; South Africa;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • Z0 - Other Special Topics - - General

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