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Tourism and economic growth in South Africa: Evidence from linear and nonlinear cointegration frameworks

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  • Phiri, Andrew

Abstract

This study examines cointegration and causal effects between tourism and economic growth in South Africa for annual data collected between the period of 1995 and 2014. The paper applies two empirical approaches to this end; one being the conventional Engle and Granger (1987) linear cointegration framework, and the second being a nonlinear cointegration framework of Enders and Granger (1998). Furthermore, two empirical measures of tourism development are used in the study, namely; tourist receipts and number of international tourist arrivals. In line with conventional wisdom, the empirical results of the linear framework supports the tourism-led growth hypothesis when tourist receipts are used as a measure of tourism development. However, the nonlinear framework depicts bi-directional causality between tourist receipts and economic growth. Furthermore, the linear framework supports the economic-growth-driven-tourism-hypothesis for tourist arrivals whereas the nonlinear framework depicts no causality between tourist arrivals and economic growth. Therefore, our study emphasizes on the direct relevance which tourist expenditures rather than number of tourist arrivals hold towards economic growth and overall economic development.

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  • Phiri, Andrew, 2015. "Tourism and economic growth in South Africa: Evidence from linear and nonlinear cointegration frameworks," MPRA Paper 65000, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:65000
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    Cited by:

    1. Natanya Meyer & Christelle Auriacombe, 2019. "Good Urban Governance and City Resilience: An Afrocentric Approach to Sustainable Development," Sustainability, MDPI, Open Access Journal, vol. 11(19), pages 1-18, October.
    2. Ertugrul, Hasan Murat & Mangir, Fatih, 2012. "The tourism-led growth hypothesis: empirical evidence from Turkey," MPRA Paper 96419, University Library of Munich, Germany.
    3. Fernando Sánchez López & José Nabor Cruz Marcelo, 2019. "Kidnapping as a long-term factor for cruise tourism demand: Evidence from Mexico (El secuestro como factor de largo plazo para la demanda de turismo de cruceros: evidencia de México)," Revista Desarrollo y Sociedad, Universidad de los Andes - CEDE, vol. 83(5), pages 185-217, September.
    4. Phiri, Andrew, 2019. "The Feldstein-Horioka Puzzle and the Global Financial Crisis: Evidence from South Africa using Asymmetric Cointegration Analysis," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 72(2), pages 139-170.
    5. Juan Gabriel Brida & Bibiana Lanzilotta & Fiorella Pizzolon, 2016. "Dynamic relationship between tourism and economic growth in MERCOSUR countries: a nonlinear approach based on asymmetric time series models," Economics Bulletin, AccessEcon, vol. 36(2), pages 879-894.
    6. Haroon Bhorat & François Steenkamp & Christopher Rooney & Nomsa Kachingwe & Adrienne Lees, 2016. "Understanding and characterizing the services sector in South Africa: An overview," WIDER Working Paper Series wp-2016-157, World Institute for Development Economic Research (UNU-WIDER).
    7. Fernando Sánchez López, 2019. "Unemployment and Growth in the Tourism Sector in Mexico: Revisiting the Growth-Rate Version of Okun’s Law," Economies, MDPI, Open Access Journal, vol. 7(3), pages 1-17, August.
    8. Shahzad, Syed Jawad Hussain & Shahbaz, Muhammad & Ferrer, Román & Kumar, Ronald Ravinesh, 2017. "Tourism-led growth hypothesis in the top ten tourist destinations: New evidence using the quantile-on-quantile approach," Tourism Management, Elsevier, vol. 60(C), pages 223-232.
    9. Phiri, Andrew, 2017. "The Feldstein-Horioka puzzle and the global recession period: Evidence from South Africa using asymmetric cointegration analysis," MPRA Paper 79096, University Library of Munich, Germany.
    10. Christos Kollias & Stephanos Papadamou, 2019. "Peace And Tourism: A Nexus? Evidence From Developed And Developing Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(02), pages 323-339, March.
    11. De Bruyn C & Meyer N & Meyer D.F, 2018. "Assessing the Dynamic Economic Impact of Tourism in a Developing Region in South Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 10(5), pages 274-283.
    12. Azeez, Rasheed Oluwaseyi, 2019. "Is Tourism a Sustainable Haven for Economic Growth in North African Countries? An Evidence From Panel Analysis," MPRA Paper 93449, University Library of Munich, Germany.
    13. Jiranyakul, Komain, 2016. "The Validity of the Tourism-Led Growth Hypothesis for Thailand," MPRA Paper 72716, University Library of Munich, Germany.
    14. Tihana Škrinjarić, 2019. "Examining the Causal Relationship between Tourism and Economic Growth: Spillover Index Approach for Selected CEE and SEE Countries," Economies, MDPI, Open Access Journal, vol. 7(1), pages 1-19, March.
    15. Osinubi, Tolulope Temilola & Osinubi , Olufemi Bankole, 2020. "Inclusive Growth in Tourism-led Growth Hypothesis: Evidence from Nigeria," African Journal of Economic Review, African Journal of Economic Review, vol. 8(2), July.
    16. Wu, Po-Chin & Liu, Shiao-Yen & Hsiao, Juei-Ming & Huang, Tsai-Yuan, 2016. "Nonlinear and time-varying growth-tourism causality," Annals of Tourism Research, Elsevier, vol. 59(C), pages 45-59.
    17. Katleho Makatjane & Ntebogang Moroke & Diteboho Xaba, 2017. "Threshold Cointegration and Nonlinear Causality test between Inflation Rate and Repo Rate," Journal of Economics and Behavioral Studies, AMH International, vol. 9(3), pages 163-170.
    18. Suhel & Abdul Bashir, 2018. "The role of tourism toward economic growth in the local economy," Economic Journal of Emerging Markets, Universitas Islam Indonesia, Department of Economics, vol. 10(1), pages 32-39, April.
    19. Haroon Bhorat & François Steenkamp & Christopher Rooney & Nomsa Kachingwe & Adrienne Lees, 2016. "Understanding and characterizing the services sector in South Africa," WIDER Working Paper Series 157, World Institute for Development Economic Research (UNU-WIDER).
    20. Uzma Khan, 2020. "Does Tourism Boost Economic Growth: Evidence from Italy," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 214-222.

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    More about this item

    Keywords

    Tourism receipts; Tourist arrivals; Economic growth; cointegration; causality tests; MTAR-TEC; South Africa.;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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