Modelling Tourism and Economic Growth Nexus in Africa: A Symmetric Panel ARDL Approach

Abstract

We model the nexus between tourism and economic growth in Africa using annual data that runs from 1995-2016 for 48 African countries. We approach the study in two waysall the selected African countries and each of the five regions of the continent distinctly. Symmetric panel Autoregressive Distributed Lag (ARDL) and Granger non-causality test were utilized for the study. Our empirical evidence affirms that tourism is indispensable for growth in Africa, Eastern, Northern, Southern and Western Africa in the long run. In the short run, tourism contributes insignificantly to growth in Central, Northern, Southern and Western Africa but insignificantly reduces growth in Africa and Eastern Africa. We observe an evidence of bidirectional causality between tourism and economic growth in Africa, Central, Eastern and Northern Africa, a unidirectional causality from growth to tourism in West Africa and from tourism to growth in Northern Africa. We therefore conclude that tourism drives economic growth in Africa.

A New Intuition into Tourism-Inclusive Growth Nexus in Turkey and Nigeria (1995 – 2018)

“…In other words, rise in a nation's GDP is powered by increased tourism activities. Understandably, due to the aforementioned largely positive effects of tourism to national growth and development, a significant bulk of the literature is in tune with this hypothesis (Hatemi-J et al, 2014;Terzi, 2015;Jackman, 2012;Cortes-Jimenez & Pulina, 2006;IsikMaden et al, 2019;Atan & Arslanturk, 2012;Yusuff & Ayinde, 2015;Eyuboglu & Eyuboglu, 2019;Phiri, 2016;Muhtaseb & Daoud, 2017;Young, 2020;Govdeli & Direcki, 2017;Zumba et al, 2019;Azeez, 2019;Zoturk, 2009;Ovat, 2003;Ertugrul & Mangir, 2012). Commonly referred to as TLGH (Tourism-Led Growth Hypothesis), this seems to be the most common thread in the literature.…”

“…When the opposite relationship ensues, that is, when there is a single unidirectional causation running from economic growth to tourism, this is dubbed a conservation hypothesis. Several papers lay claim to this hypothesis, with their findings exhibiting a direct relationship between economic growth and tourism activities (Jackman & Lorde, 2012;Zumba et al, 2019;Hatemi-J et al, 2014;Phiri, 2016).…”

“…A feedback hypothesis occurs when a 2-way causality exists between tourism and economic growth, with either variable capable of being a causative factor. Simply put, spikes or changes in tourism activities result in changes in economic growth, and at the same time, shifts in the level of a nation's GDP have a resultant effect on tourism as well (Cortes-Jimenez & Pulina, 2006;Zumba et al, 2019;Dritsakis, 2012, Phiri, 2016Muhtaseb & Daoud, 2017).…”

“…In Africa, several papers have attempted to empirically verify if TLGH holds true. Zumba et al, 2019; finds tourism indispensable for the totality of Africa, in their study to establish how tourism impacts on economic growth in both the short-term and long-term. Symmetric panel ARDL and Granger non-causality test shows that a feedback hypothesis exists between tourism and economic growth in North, East and Central Africa, while tourism assumes the position of the driven and the driver in West Africa and North Africa respectively.…”

“…As earlier stated, the previously published papers do not adopt inclusive growth in carrying out their analysis. Other measures of growth such as tourism contribution to GDP (Zoturk, 2009), GDP growth (IsikMaden et al, 2019;Zumba et al, 2019), real GDP (Ertugrul & Mangir, 2012) and GDP per capita (Eyuboglu & Eyuboglu, 2019) are used to examine the effect of tourism in their studies.…”