Relationship between inbound tourism development and economic growth: an empirical panel data study on mainland China

Abstract

[eng] This paper analyses the relationship between inbound tourism development and economic growth using a general dynamic panel data model, and testing for panel cointegration and Granger causality. It is based on the yearly series of tourism foreign exchange income and GDP per capital for 31 provinces in mainland China of the period from 1997 to 2019. Results indicate that a positive long-run relationship between inbound tourism and economic growth only exists in the east region, while the other regions and the full sample have a negative long-run relationship. When applying the panel Granger causality technique, evidence in favour of tourism-led growth hypothesis is found in the full sample, as well as east and west regions. Furthermore, there’s also evidence showing that economic growth promotes tourism development in the full sample, middle and west regions. No Granger causality is found in the traditionally heavily industrial northeast region. Results differ considerably from the research using data of 20 years ago, implying the importance of rich information carrying capacity and effectiveness of the latest data.