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Does Tourism Affect Economic Growth of China? A Panel Granger Causality Approach

Author

Listed:
  • Yong Su

    (Law and Public Management School, Leshan Normal University, Leshan City 614000, China)

  • Jacob Cherian

    (College of Business, Abu Dhabi University, P.O. Box 59911, Abu Dhabi, United Arab Emirates)

  • Muhammad Safdar Sial

    (Department of Management Sciences, COMSATS University Islamabad (CUI), Islamabad 44000, Pakistan)

  • Alina Badulescu

    (Department of Economics and Business, Faculty of Economic Sciences, University of Oradea, 410087 Oradea, Romania)

  • Phung Anh Thu

    (Faculty of Finance and Accounting, Nguyen Tat Thanh University, 300 A Nguyen Tat Thanh Street, District 4, Ho Chi Minh City 700000, Vietnam)

  • Daniel Badulescu

    (Department of Economics and Business, Faculty of Economic Sciences, University of Oradea, 410087 Oradea, Romania)

  • Sarminah Samad

    (Department of Business Administration, College of Business and Administration, Princess Nourah Bint Abdulrahman University, Riyadh 11671, Saudi Arabia)

Abstract

The main purpose of the current study is to investigate if tourism affects economic growth of China. The data set has been acquired from the Beijing Municipal Bureau of Statistics, and the time span of the data set takes into account a 20-year time period, from 2000 to 2019. To determine the strength of the above-mentioned relationship previous models that have been used for this research are mainly VAR (vector auto-regression) and VECM (vector error correction) models. The VAR and VECM models have been conducted together with the Granger causality test. The internal revenue generated from tourism-related activities is taken as being the main indicator for the tourism industry, while economic growth is determined by GDP (gross domestic product). We support the above-mentioned notion, as we found that a strong relationship exists between the development of the tourism industry and economic growth. Moreover, our analysis also indicates that this industry has a major impact on long-term economic growth in the region as well. This study thus provides further support to the existing literature on the topic of tourism and the impact that tourism-related activities have upon economic development and growth. The existence and the impact of tourism-related activities upon long-term economic growth were confirmed by the results of the VAR models. At the same time, the unidirectional results of VECM models have confirmed the existence of economic growth in the short term. In our case, the cardinal relationship between the development of the tourism industry and the economic growth in the Beijing region of China have managed to provide strong empirical support to the earlier stated notions and to the literature alike.

Suggested Citation

  • Yong Su & Jacob Cherian & Muhammad Safdar Sial & Alina Badulescu & Phung Anh Thu & Daniel Badulescu & Sarminah Samad, 2021. "Does Tourism Affect Economic Growth of China? A Panel Granger Causality Approach," Sustainability, MDPI, vol. 13(3), pages 1-12, January.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:3:p:1349-:d:488408
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    References listed on IDEAS

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