THE ECONOMIC SIGNIFICANCE OF TOURISM: CASE STUDY OF AN ASEAN COUNTRY
DOI:
https://doi.org/10.14456/psakuijir.2023.5Keywords:
Tourism, Economic Growth, ASEAN, ThailandAbstract
This study aims to observe the short- and long-term relationships between selected macroeconomic variables and tourism which is linked to economic growth. This research particularly performs a triangular Granger relationships analysis of the variables and Granger causality test under VECM. Apart from tourism variables, the current research proposes a few macroeconomic variables, such as exports, human capital and physical capital as the control variables, for determining the nature of causality of these variables with economic growth. Not many studies have been published on governments’ tourism expenditure and tourism income or receipts under the neoclassical exports and growth model, and the available empirical findings are mixed and inconclusive. The time series data of 28 years from 1989 to 2017 is used for the analysis. As the economy grows, all the gross domestic product components, such as human and physical capital, government spending, and exports also expand. With time, these variables exhibit some upward moving patterns. Tourism receipts are found to have bidirectional causality with economic growth in Thailand in the long run. Granger causality from economic growth to physical capital is also found in the short run, suggesting that Thailand should strive to achieve robust economic progress in the first place in the short-term. In general, although this study does not differentiate between the value of capital stock for the private and public sectors, the study is able to obtain a fairly reliable measure of the trend in fixed investment in Thailand.
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