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Tourism and Economic Growth in Nepal

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  • Bishnu Prasad Gautam, Ph.D.

    (Nepal Rastra Bank)

Abstract

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, Economic Research Department, vol. 23(2), pages 18-30, October.
    • Handle: RePEc:nrb:journl:v:23:y:2011:i:2:p:2
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    References listed on IDEAS

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    1. Ministry of Finance Government of India,, 2011. "Economic Survey 2010-11," OUP Catalogue, Oxford University Press, number 9780198074090.
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    3. 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.
    4. Isabel Cortés-Jiménez & Manuel Artís, 2005. "The role of the tourism sector in economic development - Lessons from the Spanish experience," ERSA conference papers ersa05p488, European Regional Science Association.
    5. Samina Khalil & Mehmood Khan Kakar & Waliullah, 2007. "Role of Tourism in Economic Growth: Empirical Evidence from Pakistan Economy," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(4), pages 985-995.
    6. Jie Zhang, 2001. "Tourism Impact Analysis on Danish Regions," ERSA conference papers ersa01p275, European Regional Science Association.
    7. Bishnu Prasad Gautam Ph. D., 2008. "Economic Impact of Tourism Finance in Nepal," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 20, pages 62-73, April.
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    Cited by:

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    2. Nino Fonseca & Marcelino Sánchez-Rivero, 2020. "Significance bias in the tourism-led growth literature," Tourism Economics, , vol. 26(1), pages 137-154, February.
    3. 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.
    4. Nepal, Rabindra & al Irsyad, M. Indra & Nepal, Sanjay Kumar, 2018. "Tourist arrivals, energy consumption and pollutant emissions in a developing economy–implications for sustainable tourism," Working Papers 2018-10, University of Tasmania, Tasmanian School of Business and Economics.

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    More about this item

    Keywords

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    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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