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The Relationship between Foreign Direct Investment and Tourism Development: Evidence from Developing Countries

Author

Listed:
  • Ahmad Jafari Samimi

    () (University of Mazandaran, Babolsar, Iran)

  • Somaye Sadeghi

    () (Islamic Azad University Firoozkooh, Iran)

  • Soraya Sadeghi

    () (Islamic Azad University Firoozkooh, Iran)

Abstract

This paper investigates the existence of Granger causality and co-integrated relationships between tourism related Foreign Direct Investment (FDI)and tourism development in developing countries using panel VECM techniques from 1995 to 2008. The results confirm the existence of a co-integrated relationship between variables in the long run. In addition, there is a bilateral long-run causality between tourism related FDI and tourism development, while there is no short-run causality between variables.

Suggested Citation

  • Ahmad Jafari Samimi & Somaye Sadeghi & Soraya Sadeghi, 2013. "The Relationship between Foreign Direct Investment and Tourism Development: Evidence from Developing Countries," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 5(2), pages 59-68, July.
  • Handle: RePEc:umk:journl:v:5:y:2013:i:2:p:59-68
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    File URL: http://ijie.um.edu.my/filebank/published_article/4920/Fulltext%203.pdf
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    References listed on IDEAS

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    1. Asafu-Adjaye, John, 2000. "The relationship between energy consumption, energy prices and economic growth: time series evidence from Asian developing countries," Energy Economics, Elsevier, vol. 22(6), pages 615-625, December.
    2. Saroja Selvanathan & E.A. Selvanathan & Brinda Viswanathan, 2009. "Causality between Foreign Direct Investment and Tourism : Empirical Evidence from India," Finance Working Papers 22944, East Asian Bureau of Economic Research.
    3. Rainer Andergassen & Guido Candela, 2013. "Less Developed Countries, Tourism Investments and Local Economic Development," Review of Development Economics, Wiley Blackwell, vol. 17(1), pages 16-33, February.
    4. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    5. Pedroni, Peter, 1999. " Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-670, Special I.
    6. M. Thea Sinclair, 1998. "Tourism and economic development: A survey," Journal of Development Studies, Taylor & Francis Journals, vol. 34(5), pages 1-51.
    7. Krueger, Anne O, 1980. "Trade Policy as an Input to Development," American Economic Review, American Economic Association, vol. 70(2), pages 288-292, May.
    8. World Bank, 2010. "World Development Indicators 2010," World Bank Publications, The World Bank, number 4373.
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    Citations

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    Cited by:

    1. Tomohara, Akinori, 2016. "Japan's tourism-led foreign direct investment inflows: An empirical study," Economic Modelling, Elsevier, vol. 52(PB), pages 435-441.

    More about this item

    Keywords

    developing countries; Foreign Direct Investment; panel VECM; tourism industry;

    JEL classification:

    • 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
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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