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Does tourism effectively stimulate Malaysia's economic growth?

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  • Tang, Chor Foon
  • Tan, Eu Chye

Abstract

This study attempts to further verify the validity of the tourism-led growth hypothesis in Malaysia using a multivariate model derived from the Solow growth theory. It employs annual data from 1975 to 2011. We find that economic growth, tourism and other determinants are cointegrated. Specifically, tourism has a positive impact on Malaysia's economic growth both in the short-run and in the long-run. The Granger causality test indicates that tourism Granger-causes economic growth. All this provides the empirical support for the tourism-led growth hypothesis in Malaysia. In light of this, any policy initiative that promotes tourism could contribute to Malaysia's economic growth.

Suggested Citation

  • Tang, Chor Foon & Tan, Eu Chye, 2015. "Does tourism effectively stimulate Malaysia's economic growth?," Tourism Management, Elsevier, vol. 46(C), pages 158-163.
    • Handle: RePEc:eee:touman:v:46:y:2015:i:c:p:158-163
    DOI: 10.1016/j.tourman.2014.06.020
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