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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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    References listed on IDEAS

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    Cited by:

    1. Juan Gabriel Brida & Bibiana Lanzilotta & Fiorella Pizzolon, 2016. "Dynamic relationship between tourism and economic growth in MERCOSUR countries: a nonlinear approach based on asymmetric time series models," Economics Bulletin, AccessEcon, vol. 36(2), pages 879-894.
    2. Andrew Phiri, 2017. "The Feldstein-Horioka puzzle and the global financial crisis: Evidence from South Africa using asymmetric cointegation analysis," Working Papers 1701, Department of Economics, Nelson Mandela University, revised May 2017.
    3. Haroon Bhorat & François Steenkamp & Christopher Rooney & Nomsa Kachingwe & Adrienne Lees, 2016. "Understanding and characterizing the services sector in South Africa," WIDER Working Paper Series 157, World Institute for Development Economic Research (UNU-WIDER).
    4. Shahzad, Syed Jawad Hussain & Shahbaz, Muhammad & Ferrer, Román & Kumar, Ronald Ravinesh, 2017. "Tourism-led growth hypothesis in the top ten tourist destinations: New evidence using the quantile-on-quantile approach," Tourism Management, Elsevier, vol. 60(C), pages 223-232.
    5. Phiri, Andrew, 2017. "The Feldstein-Horioka puzzle and the global recession period: Evidence from South Africa using asymmetric cointegration analysis," MPRA Paper 79096, University Library of Munich, Germany.
    6. Jiranyakul, Komain, 2016. "The Validity of the Tourism-Led Growth Hypothesis for Thailand," MPRA Paper 72716, University Library of Munich, Germany.
    7. Wu, Po-Chin & Liu, Shiao-Yen & Hsiao, Juei-Ming & Huang, Tsai-Yuan, 2016. "Nonlinear and time-varying growth-tourism causality," Annals of Tourism Research, Elsevier, vol. 59(C), pages 45-59.

    More about this item

    Keywords

    tourism receipts; tourist arrivals; economic growth; South Africa;

    JEL classification:

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

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