International tourism and economic growth: Empirical evidence from Kerala

Abstract

This study evaluates the trend and growth pattern of international tourism and analyzes the impact of tourism on the economic growth of Kerala for the past four decades from 1980 to 2019. The time series analysis employed in this study uses the secondary data on Net State Domestic Product (NSDP) of Kerala at constant prices, foreign tourist arrivals (FTA), and foreign exchange earnings (FEE) at constant prices, collected from various sources of the State and Central Government. The methodology of this study uses the Augmented Dickey Fuller (ADF) test for unit root, followed by the Johansen Cointegration test, the Vector Error Correction Model (VECM), and the Granger Causality test. The results of the analysis reveal the existence of a positive and significant unidirectional long‐run causality running from tourism to the economic growth of Kerala and a bidirectional causal relationship between tourism development and the economic growth in the short run.