Tourism industry and economic growth nexus in Beijing, China

In the developing economy, tourism is the most visible and steadiest growing facade. Tourism is considered one of the rapidly increasing elements for economic development from the last two decades. Therefore, the proposed study used vector autoregression (VAR) model, error correction model (ECM), an...

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Bibliographic Details
Published inEconomies Vol. 7; no. 1; pp. 1 - 15
Main Authors Yang, Songling, Ishtiag, Muhammad
Format Journal Article
LanguageEnglish
Published Basel MDPI 25.03.2019
MDPI AG
Subjects
and ECM model
Budget deficits
Causality
cointegration test
Developing countries
Econometrics
Economic development
Economic growth
Economic models
Employment
GDP
Global economy
Globalization
Gross Domestic Product
Hypotheses
Infrastructure
LDCs
Tourism
Tourism development
VAR model
Beijing China
China
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Summary:In the developing economy, tourism is the most visible and steadiest growing facade. Tourism is considered one of the rapidly increasing elements for economic development from the last two decades. Therefore, the proposed study used vector autoregression (VAR) model, error correction model (ECM), and the Granger causality to check the relationship between the tourism industry and economic growth based on the data of the Beijing municipal bureau of statistics from 1994 to 2015. Gross domestic product (GDP) is used as a replacement variable for the economic growth index, while internal tourism revenue is used as a tourism industry indicator. The study supports the tourism-led growth hypothesis proposed in the existing literature in a different survey of tourism and economic development. The results show that there is a strong relationship in the tourism industry and economic growth in the context of Beijing, and at the same time, tourism creates a more significant increase in long run local real economic accomplishments. The results of the VAR model confirm that in the long run, Beijing's economic growth is affected by domestic tourism, while the ECM model shows unidirectional results in the short term. Similarly, there is a one-way causal relationship between the tourism industry and economic growth in Beijing, China. The empirical results are in strong support of the concept that tourism causes growth.
ISSN:2227-7099
2227-7099
DOI:10.3390/economies7010025