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Does Tourism Really Matter for Economic Growth? Evidence from Nepal


  • Shoorabeer Paudyal Ph.D.

    () (Tribhuvan University)


Tourism seems to be widely recognized as the one among a few sectors in Nepal which can be an engine of economic growth. However, there are few empirical studies about Nepalese tourism. This paper, thus, attempts to examine the impact of t ourism and other related macroeconomic variables on the economic growth of Nepal by deriving tourism income multiplier from the Keynesian macroeconomic model. The three stage least square and seemingly unrelated regressions are the techniques employed for estimating the value of multiplier. The estimated value of multiplier based onregression results over thirty six year period from 1975 to 2010 is estimated at 1.21. In addition, Granger causality tests are used to confirm the direction of the impact of one variable on another variable, which reveals that there exists bi-directional impact in the case of tourism receipts and GDP. In addition, tourism receipts are found to have bi-directional relationship with some other variables such as GNI, exports, private consumption, imports and so on. Thus, tourism multiplier and the Granger causality tests show that tourism is important component for economic growth in Nepal.

Suggested Citation

  • Shoorabeer Paudyal Ph.D., 2012. "Does Tourism Really Matter for Economic Growth? Evidence from Nepal," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 24(1), pages 48-66, April.
  • Handle: RePEc:nrb:journl:v:24:y:2012:i:1:p:48-66

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    References listed on IDEAS

    1. S.R. Osmani & B.B. Bajracharya, 2008. "Nepal," Chapters, in: Anis Chowdhury & Wahiduddin Mahmud (ed.), Handbook on the South Asian Economies, chapter 5, Edward Elgar Publishing.
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    More about this item


    Tourism receipts; tourism income multiplier; three stage least square;

    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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