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Tourism and Economic Growth: A Panel Data Analysis for Pacific Island Countries

Author

Listed:
  • Paresh Kumar Narayan

    (School of Accounting, Economics and Finance, Faculty of Business and Law, Deakin University, 70 Elgar Road, Burwood, Victoria 3125, Australia)

  • Seema Narayan

    (School of Economics, Finance and Marketing, Royal Melbourne Institute of Technology, Melbourne, Australia)

  • Arti Prasad

    (Department of Economics, Monash University, Melbourne, Australia)

  • Biman Chand Prasad

    (School of Economics, The University of the South Pacific, Suva, Fiji Islands)

Abstract

The contribution of tourism to the economic growth of Pacific Island countries (PICs) has achieved significance in the past decade. The shift in the economic policies of the PICs from the late 1980s has been decisively away from import substitution and agriculture to urban-based manufacturing and services sectors. Tourism is the main component of the services sector in the PICs. The contribution of tourism to economic growth in Fiji, Tonga, the Solomon Islands and Papua New Guinea is expected to grow. The authors use panel data for the four PICs to test the long-run relationship between real GDP and real tourism exports. They find support for panel cointegration and the results suggest that a 1% increase in tourism exports increases GDP by 0.72% in the long run and by 0.24% in the short run.

Suggested Citation

  • Paresh Kumar Narayan & Seema Narayan & Arti Prasad & Biman Chand Prasad, 2010. "Tourism and Economic Growth: A Panel Data Analysis for Pacific Island Countries," Tourism Economics, , vol. 16(1), pages 169-183, March.
    • Handle: RePEc:sae:toueco:v:16:y:2010:i:1:p:169-183
    DOI: 10.5367/000000010790872006
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    References listed on IDEAS

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