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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.

Suggested Citation

  • 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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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Andrew Phiri, 2017. "The Feldstein-Horioka puzzle and the global financial crisis: Evidence from South Africa using asymmetric cointegation analysis," Working Papers 1701, Department of Economics, Nelson Mandela University, revised May 2017.
    3. 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).
    4. 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.
    5. 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.
    6. Jiranyakul, Komain, 2016. "The Validity of the Tourism-Led Growth Hypothesis for Thailand," MPRA Paper 72716, University Library of Munich, Germany.
    7. 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.

    More about this item

    Keywords

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

    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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