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Analysing the impact of tourism foreign direct investment on economic growth

Author

Listed:
  • Sheereen Fauzel

    (University of Mauritius, Mauritius)

  • Boopen Seetanah

    (University of Mauritius, Mauritius)

  • R.V. Sannassee

    (University of Mauritius, Mauritius)

Abstract

The present study attempts to address the important question of whether foreign direct investment (FDI) flowing into the tourism sector has served to enhance economic growth in Mauritius for the period 1984–2014. Using a dynamic vector error correction model, and catering for dynamism, the results show that tourism FDI has indeed contributed to fostering economic growth; albeit the magnitude of the coefficient being relatively smaller than FDI in the non-tourism sector. A plausible explanation for such a finding may reside in the fact that the bulk of FDI flows in the non-tourism sectors while domestic investment predominates in the tourism sector in Mauritius. The findings also demonstrate a positive relationship between tourism development and economic growth, thus supporting the tourism-led growth hypothesis.

Suggested Citation

  • Sheereen Fauzel & Boopen Seetanah & R.V. Sannassee, 2017. "Analysing the impact of tourism foreign direct investment on economic growth," Tourism Economics, , vol. 23(5), pages 1042-1055, August.
    • Handle: RePEc:sae:toueco:v:23:y:2017:i:5:p:1042-1055
    DOI: 10.1177/1354816616664249
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    References listed on IDEAS

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    2. Rukmani Gounder, 2022. "Tourism-led and economic-driven nexus in Mauritius: Spillovers and inclusive development policies in the case of an African nation," Tourism Economics, , vol. 28(4), pages 1040-1058, June.
    3. Manuel González-Gómez, 2022. "European outbound tourism expansion on the islands of Cape Verde," Tourism Economics, , vol. 28(4), pages 1129-1150, June.
    4. Xiuying Ma & Yongjing Wang & Haiyan Song & Han Liu, 2020. "Time-varying mechanisms between foreign direct investment and tourism development under the new normal in China," Tourism Economics, , vol. 26(2), pages 324-343, March.
    5. Zhao, Qingbin & Li, Guoqiang & Gu, Xinhua & Lei, Chun Kwok, 2021. "Inequality hikes, saving surges, and housing bubbles," International Review of Economics & Finance, Elsevier, vol. 72(C), pages 349-363.
    6. Kashif Munir & Mehwish Iftikhar, 2021. "Asymmetric Impact of FDI and Exchange Rate on Tourism: Evidence From Panel Linear and Nonlinear ARDL Model," SAGE Open, , vol. 11(3), pages 21582440211, September.
    7. Char-lee Moyle & Fabrizio Carmignani & Brent Moyle & Sajid Anwar, 2021. "Beyond Dutch Disease: Are there mediators of the mining–tourism nexus?," Tourism Economics, , vol. 27(4), pages 744-761, June.
    8. Warren Moraghen & Boopen Seetanah & Noor Sookia, 2021. "Impact of exchange rate and exchange rate volatility on foreign direct investment inflow for Mauritius: A dynamic time series approach," African Development Review, African Development Bank, vol. 33(4), pages 581-591, December.

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