Acta Oeconomica Pragensia 2017, 25(4):3-12 | DOI: 10.18267/j.aop.586

THE RELATIONSHIP BETWEEN INTERNATIONAL TOURIST ARRIVALS AND FOREIGN DIRECT INVESTMENT: A GRANGER CAUSALITY ANALYSIS

Ly-Pham ThiMinh, Hieu LeMinh, Phung-Tran ThiPhi
Faculty of Business Administration, Ton Duc Thang University, Vietnam

It is widely recognized that a rapid increase in foreign direct investment leads to an increase in tourism at different levels. This paper applied a Granger Causality test to investigate the causal relationship between International Tourist Arrivals (ITA) and Foreign Direct Investment (FDI) across countries. By using time series data from six countries in the top ten European destinations (France, Spain, Italy, Germany, Turkey, and the United Kingdom) for the 1980-2014 period, the findings reveal that there is a unidirectional causality between ITA and FDI. The results are strongly proven with the same results when the lag between FDI and ITA is lengthened at lag 1. Moreover, the outcome evidence has a unidirectional relationship running from FDI to ITA when GDP is added as the controlling variable.

Keywords: international tourist arrivals, foreign direct investment, granger causality
JEL classification: C23, F21, L83, O57

Published: August 1, 2017  Show citation

ACS AIP APA ASA Harvard Chicago IEEE ISO690 MLA NLM Turabian Vancouver
ThiMinh, L., LeMinh, H., & ThiPhi, P. (2017). THE RELATIONSHIP BETWEEN INTERNATIONAL TOURIST ARRIVALS AND FOREIGN DIRECT INVESTMENT: A GRANGER CAUSALITY ANALYSIS. Acta Oeconomica Pragensia, 25(4), 3-12. doi: 10.18267/j.aop.586
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. CONTRACTOR, F. J. and KUNDU, S. K., 1995. Explaining Variation in the Degree of Internationalization Across Firms: The Case of the Hotel Industry. Journal of International Management, 1(1), 87-123. ISSN 1075-4253.
    2. DOAN, T. A., 1992. RATS Software Package, User's Manual, Version 4.0. Estima, Evanston Illinois.
    3. DUNNING, J. H. and MCQUEEN, M., 1981. The Eclectic Theory of International Production: A Case Study of the International Hotel Industry. Managerial and Decision Economics, 2(4), 197-210, https://doi.org/ 10.1002/mde.4090020401 Go to original source...
    4. ENDERS, W., 1995. Applied Econometric Time Series: Wiley Series in Probability and Mathematical Statistics. New York: John Wiley and Sons. ISBN 978-0471039419.
    5. ENGLE, R. F. and GRANGER, C. W., 1987. Co-integration and Error Correction: Representation, Estimation, and Testing. Econometrica: Journal of the Econometric Society, 55(2), 251-276, https://doi.org/ 10.2307/1913236 Go to original source...
    6. GRANGER, C. W. and NEWBOLD, P., 1974. Spurious Regressions in Econometrics. Journal of Econometrics, 2(2), 111-120, https://doi.org/10.1016/0304-4076(74)90034-7 Go to original source...
    7. GUNDUZ, L. and HATEMI-J, A., 2005. Is the Tourism-Led Growth Hypothesis Valid for Turkey? Applied Economics Letters, 12(8), 499-504, https://doi.org/10.1080/13504850500109865 Go to original source...
    8. HALEY, U. C. and HALEY, G. T., 1997. When the Tourists Flew in: Strategic Implications of Foreign Direct Investment in Vietnam's Tourism Industry. Management Decision, 35(8), 595-604, https://doi.org/10.1108/00251749710176091 Go to original source...
    9. KATIRCIOGLU, S., 2011. The Bounds Test of the Level Relationship and Causality Between Foreign Direct Investment and International Tourism: The Case of Turkey. E+M Ekonomie a Management, 1, 6-13. ISSN 2336-5604.
    10. KIM, H. J., CHEN, M.-H. and JANG, S., 2006. Tourism Expansion and Economic Development: The Case of Taiwan. Tourism Management, 27(5), 925-933, https://doi.org/10.1016/j.tourman.2005.05.011 Go to original source...
    11. KUNDU, S. K. and CONTRACTOR, F. J., 2000. Country Location Choices of Service Multinationals: An Empirical Study of the International Hotel Sector. Journal of International Management, 5(4), 299-317, https://doi.org/10.1016/S1075-4253(99)00017-4 Go to original source...
    12. LASHKARIZADEH, M., GASHTI, H. P. and SHAHRIVAR, R. B., 2010. Evaluation of the Relationship between Tourism Industry and Economic Growth in Iran. Asian Journal of Business and Management Sciences, 1(9), 88-97. ISSN 2047-2528.
    13. LÜLTKEPOHL, H., 1993. Introduction to Multiple Time Series. Berlin: Springer Verlag. ISBN 978-3-540-56940-4. Go to original source...
    14. LUO, Q., GE, T. and FENG, J., 2011. Granger Causality with Signal-Dependent Noise. Neuroimage, 57(4), 1422-1429, https://doi.org/10.1016/j.neuroimage.2011.05.054 Go to original source...
    15. MOSCONI, R. and GIANNINI, C.,1992. Non-causality in Cointegrated Systems: Representation Estimation and Testing. Oxford Bulletin of Economics and Statistics, 54(3), 399-417, https://doi.org/10.1111/j.1468-0084.1992.tb00009.x Go to original source...
    16. MOUDATSOU, A. and KYRKILIS, D., 2011. FDI and Economic Growth: Causality for the EU and ASEAN. Journal of Economic Integration, 26(3), 554-577, https://doi.org/10.11130/jei.2011.26.3.554 Go to original source...
    17. ONGAN, S. and DEMIROZ, D. M., 2005. The Contribution of Tourism to the Long-run Turkish Economic Growth. Journal of Economics, 53(9), 880-894. ISSN 0013-3035.
    18. SALLEH, N. H. M., OTHMAN, R. and SARMIDI, T., 2011. An Analysis of the Relationships between Tourism Development and Foreign Direct Investment: An Empirical Study in Selected Major Asian Countries. International Journal of Business Social Science, 2(17), 250-257. ISSN 2219-1933.
    19. SANFORD, D. M. and DONG, H., 2000. Investment in Familiar Territory: Tourism and New Foreign Direct Investment. Tourism Economics, 6(3), 205-219, https://doi.org/10.5367/000000000101297596 Go to original source...
    20. SCHWERT, G. W.,1987. Effects of Model Specification on Tests for Unit Roots in Macroeconomic Data. Journal of Monetary Economics, 20(1), 73-103, https://doi.org/10.1016/0304-3932(87)90059-6 Go to original source...
    21. SIMS, C. A., 1980. Macroeconomics and Reality. Econometrica: Journal of the Econometric Society, 48(1), 1-48, https://doi.org/10.2307/1912017 Go to original source...
    22. THI MINH LY PHAM and THI PHI PHUNG TRAN, 2015. The Granger Causality Relationship between International Tourist Arrivals and Foreign Direct Investment: Empirical Evidence from Turkey. In LÖSTER, T. and PAVELKA, T. (eds.). The 9th International Days of Statistics and Economics, Conference Proceedings, 1291-1300. Prague: Melandrium. ISBN 978-80-87990-06-3.

    This is an open access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY 4.0), which permits use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content