The causality relationships between tourism development and foreign direct investment: an empirical study in EU countries

Abstract

The main focus of this paper is the impact of foreign direct investment (FDI), official exchange rate and trade on international tourism using panel data of 27 countries over 1995-2014. The result based on the pooled mean group estimator of dynamic panels shows that there is no causality relationship between FDI and tourist receipts and a bidirectional causality relationship between real exchange rate, trade openness and tourist receipts and explains that FDI plays a significant role in expanding the tourism sector in EU countries. The appropriate policies to explore tourism resources and plans which develop new tourist venues and facilities may need to be considered in order to meet the increasing tourism receipts. RESUMENEl principal objetivo de este trabajo es el impacto de la inversión extranjera directa, el tipo de cambio oficial y el comercio en el turismo internacional utilizando datos de panel de 27 países en el periodo 1995-2004. El resultado basado en el estimador Promedio de Grupos Agrupado (pooled mean group-PMG) para datos de panel dinámico muestra que no hay relación de causalidad entre la inversión extranjera directa (FDI) y la recepción de turistas y sí una relación de causalidad bidireccional entre el tipo de cambio real, la apertura comercial y la recepción de turistas que explica que la inversión extranjera directa juega un papel significativo en el desarrollo del sector turístico en los países de la UE. Las políticas apropiadas para explorar los recursos turísticos y los planes que desarrollarán nuevos emplazamientos turísticos e instalaciones pueden necesitar ser consideradas con el fin de responder a crecientes niveles de recepción de turistas. RÉSUMÉ

Do Tourism and Institutional Quality Asymmetrically Effects on FDI Sustainability in BIMSTEC Countries: An Application of ARDL, CS-ARDL, NARDL, and Asymmetric Causality Test

“…The study findings suggest that further development in institutional quality and tourism activities will result in a positive way in the economy that induces foreign investors and increase possibilities for receiving additional FDI. These studies' findings are in line with Turan Katircioglu et al [33]; Perić and Radić [32]; Khoshnevis Yazdi, Nateghian and Sheikh Rezaie [67]; Buchanan, Le, and Rishi [19]; Jushi et al [164]. About CS-ARDL, the study findings also ascertain positive relations between institutional quality, tourism, and inflows of FDI in BIMSTEC nations, especially in the long run.…”

Causality between Tourism and Foreign Direct Investment: An Empirical Evidence from Pakistan

“…The unidirectional causality is parallel with Kaushal and Pathak (2015) who found growth rate in GDP Granger caused trade openness. One-way causal relation from exchange rate to trade openness is parallel with Yazdi et al (2017)…”

“…Cointegration test results detailed that long term relation prevails between FDI, tourism value and tourist arrivals in Saudi Arabia. Yazdi et al (2017) found no causality between tourist receipts and foreign direct investment and found two-way causality among trade openness, real exchange rate and tourist receipts and concluded that FDI significantly expands the tourism industry in European countries. Kaur and Sarin (2016) used time series models for the time period spanning from 1991 to 2014 and found one directional long term causality evidence from tourism activities to India's economic growth.…”

Asymmetric Impact of FDI and Exchange Rate on Tourism: Evidence From Panel Linear and Nonlinear ARDL Model

“…A positive relationship between FDI and tourism has been found by number of previous researchers (Alam et al, 2015, 2016; Chen, 2017; Craigwell & Moore, 2007; Katricioglu, 2011; Kaur & Sarin, 2016; Kumar, 2014; Nunkoo & Seetanah, 2018; Ohlan, 2017; Othman et al, 2012; Perić & Radıć, 2015; Ravinthirakumaran et al, 2019; Salleh et al, 2015; Samimi et al, 2013; Satrovic & Muslija, 2018). On the other hand, few studies found negative relationship between FDI and tourism (Jing et al, 2018; Khoshnevis Yazdi et al, 2017; Petanlar et al, 2016), while Siddiqui and Siddiqui (2019) found no relationship between FDI and tourism. There are very few studies which analyze the linear and nonlinear relationship between FDI, exchange rate, and tourism (Kumar et al, 2020; Meo et al, 2018).…”

“…FDI helps in bringing finance, technology transfer, development of infrastructure, employment creation, and stimulates economic growth. Along with a number of benefits that FDI brings in the host country it also plays a prominent role in developing tourism industry (Khoshnevis Yazdi et al, 2017). Tourism and FDI are two important forces affecting different countries of the world.…”