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The Relationship Between International Tourist Arrivals And Foreign Direct Investment: A Granger Causality Analysis

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  • Ly-Pham ThiMinh
  • Hieu LeMinh
  • Phung-Tran ThiPhi

Abstract

It is widely recognized that a rapid increase in foreign direct investment leads to an increase in tourism at different levels. This paper applied a Granger Causality test to investigate the causal relationship between International Tourist Arrivals (ITA) and Foreign Direct Investment (FDI) across countries. By using time series data from six countries in the top ten European destinations (France, Spain, Italy, Germany, Turkey, and the United Kingdom) for the 1980-2014 period, the findings reveal that there is a unidirectional causality between ITA and FDI. The results are strongly proven with the same results when the lag between FDI and ITA is lengthened at lag 1. Moreover, the outcome evidence has a unidirectional relationship running from FDI to ITA when GDP is added as the controlling variable.

Suggested Citation

  • Ly-Pham ThiMinh & Hieu LeMinh & Phung-Tran ThiPhi, 2017. "The Relationship Between International Tourist Arrivals And Foreign Direct Investment: A Granger Causality Analysis," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2017(4), pages 3-12.
    • Handle: RePEc:prg:jnlaop:v:2017:y:2017:i:4:id:586:p:3-12
    DOI: 10.18267/j.aop.586
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    References listed on IDEAS

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    1. John H. Dunning & Matthew McQueen, 1981. "The eclectic theory of international production: A case study of the international hotel industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 2(4), pages 197-210, December.
    2. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
    3. Douglas M. Sanford Jr & Huiping Dong, 2000. "Investment in Familiar Territory: Tourism and New Foreign Direct Investment," Tourism Economics, , vol. 6(3), pages 205-219, September.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

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    More about this item

    Keywords

    international tourist arrivals; foreign direct investment; granger causality;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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