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Tourism and Economic Growth in Nepal


  • Bishnu Prasad Gautam Ph.D.

    () (Nepal Rastra Bank)


Tourism has become an important economic activity in all the countries of the world. It creates various direct, indirect and induced effects in the economy. This paper attempts to confirm empirically about the positive impact of tourism in Nepal. It is based on Nepalese data of foreign exchange earnings from tourism and gross domestic product for the period between FY 1974/75 and 2009/10. Co-integration test has been done for ascertaining long run relationship and error correction method for short run dynamics. Granger Causality test has been applied to determine causal relationship between these variables. The evidence confirms the conventional wisdom that of tourism development, that tourism (represented by foreign exchange earnings) causes economic growth both in short and long run. The result also indicates bi-directional causality between these variables.

Suggested Citation

  • Bishnu Prasad Gautam Ph.D., 2011. "Tourism and Economic Growth in Nepal," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 23(2), pages 18-30, October.
  • Handle: RePEc:nrb:journl:v:23:y:2011:i:2:p:18-30

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    References listed on IDEAS

    1. Jacint Balaguer & Manuel Cantavella-Jorda, 2002. "Tourism as a long-run economic growth factor: the Spanish case," Applied Economics, Taylor & Francis Journals, vol. 34(7), pages 877-884.
    2. Ghali, Moheb A, 1976. " Tourism and Economic Growth: An Empirical Study," Economic Development and Cultural Change, University of Chicago Press, vol. 24(3), pages 527-538, April.
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    Cited by:

    1. Gautam, Bishnu Prasad, 2009. "Financing Practices Of Banks And Financial Institutions In Nepal," MPRA Paper 58354, University Library of Munich, Germany, revised 05 Jul 2011.
    2. Gautam, Bishnu Prasad, 2014. "Economic Dynamics of Tourism in Nepal: A VECM Approach," MPRA Paper 58102, University Library of Munich, Germany.

    More about this item


    Foreign exchange earnings; tourism; cointegration; time series analysis;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence


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