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Modelling of nonlinear asymmetric effects of changes in tourism on economic growth in an autonomous small-island economy

Brian Garrod Orcid Logo, António Almeida Orcid Logo, Luiz Machado Orcid Logo

European Journal of Tourism, Hospitality and Recreation, Volume: 13, Issue: 2, Pages: 154 - 172

Swansea University Author: Brian Garrod Orcid Logo

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DOI (Published version): 10.2478/ejthr-2023-0013

Abstract

While a substantial body of empirical evidence exists supporting the tourism-led growth hypothesis, more limited evidence exists regarding the dynamics of the relationship between tourism and economic growth in the island context, with important questions remaining to be answered regarding the linea...

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Published in: European Journal of Tourism, Hospitality and Recreation
ISSN: 2182-4924
Published: Walter de Gruyter GmbH 2024
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URI: https://cronfa.swan.ac.uk/Record/cronfa64654
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first_indexed 2023-10-11T09:44:34Z
last_indexed 2023-10-11T09:44:34Z
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spelling v2 64654 2023-10-03 Modelling of nonlinear asymmetric effects of changes in tourism on economic growth in an autonomous small-island economy 4f81981d78ed3082b232463da24d1bb9 0000-0002-5468-6816 Brian Garrod Brian Garrod true false 2023-10-03 BBU While a substantial body of empirical evidence exists supporting the tourism-led growth hypothesis, more limited evidence exists regarding the dynamics of the relationship between tourism and economic growth in the island context, with important questions remaining to be answered regarding the linearity and symmetry of the relationship. Policymakers would benefit greatly from such knowledge as they attempt to harness inbound tourism as an engine of economic growth. This study contributes to bridging this important gap in knowledge by investigating the dynamics of the relationship between tourism and GDP in Madeira, a small-island autonomous region of Portugal. The analysis employs an asymmetric nonlinear autoregressive distributed lag model, using data from 1976 to 2019. The results confirm unidirectional causality between tourism and GDP, thus corroborating the tourism-led growth hypothesis. The relationship is also found to be asymmetrical, where the retarding effect of falling tourism receipts is significantly stronger than the stimulus effect associated with increasing tourism receipts. Significant non-linear effects are also found in each adjustment pathway. In terms of policymaking, while this study confirms that investing in tourism can be an effective way of promoting economic growth, efforts should also be made to diversify both the tourism sector and the wider economy to reduce exposure to downside risks. Journal Article European Journal of Tourism, Hospitality and Recreation 13 2 154 172 Walter de Gruyter GmbH 2182-4924 NARDL model; Granger causality tests; economic growth; time series; Madeira 31 1 2024 2024-01-31 10.2478/ejthr-2023-0013 COLLEGE NANME Business COLLEGE CODE BBU Swansea University 2024-04-11T12:57:09.2858530 2023-10-03T18:18:50.9562757 Faculty of Humanities and Social Sciences School of Management - Business Management Brian Garrod 0000-0002-5468-6816 1 António Almeida 0000-0002-3216-2018 2 Luiz Machado 0000-0001-6209-969x 3 64654__29992__b7a08b812c304c05bac4a0c7c711c415.pdf 64654.VOR.pdf 2024-04-11T12:53:57.2409397 Output 800221 application/pdf Version of Record true © 2023 Brian Garrod et al. This work is licensed under the Creative Commons Attribution 4.0 License. true eng https://creativecommons.org/licenses/by/4.0/deed.en
title Modelling of nonlinear asymmetric effects of changes in tourism on economic growth in an autonomous small-island economy
spellingShingle Modelling of nonlinear asymmetric effects of changes in tourism on economic growth in an autonomous small-island economy
Brian Garrod
title_short Modelling of nonlinear asymmetric effects of changes in tourism on economic growth in an autonomous small-island economy
title_full Modelling of nonlinear asymmetric effects of changes in tourism on economic growth in an autonomous small-island economy
title_fullStr Modelling of nonlinear asymmetric effects of changes in tourism on economic growth in an autonomous small-island economy
title_full_unstemmed Modelling of nonlinear asymmetric effects of changes in tourism on economic growth in an autonomous small-island economy
title_sort Modelling of nonlinear asymmetric effects of changes in tourism on economic growth in an autonomous small-island economy
author_id_str_mv 4f81981d78ed3082b232463da24d1bb9
author_id_fullname_str_mv 4f81981d78ed3082b232463da24d1bb9_***_Brian Garrod
author Brian Garrod
author2 Brian Garrod
António Almeida
Luiz Machado
format Journal article
container_title European Journal of Tourism, Hospitality and Recreation
container_volume 13
container_issue 2
container_start_page 154
publishDate 2024
institution Swansea University
issn 2182-4924
doi_str_mv 10.2478/ejthr-2023-0013
publisher Walter de Gruyter GmbH
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Business Management{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Business Management
document_store_str 1
active_str 0
description While a substantial body of empirical evidence exists supporting the tourism-led growth hypothesis, more limited evidence exists regarding the dynamics of the relationship between tourism and economic growth in the island context, with important questions remaining to be answered regarding the linearity and symmetry of the relationship. Policymakers would benefit greatly from such knowledge as they attempt to harness inbound tourism as an engine of economic growth. This study contributes to bridging this important gap in knowledge by investigating the dynamics of the relationship between tourism and GDP in Madeira, a small-island autonomous region of Portugal. The analysis employs an asymmetric nonlinear autoregressive distributed lag model, using data from 1976 to 2019. The results confirm unidirectional causality between tourism and GDP, thus corroborating the tourism-led growth hypothesis. The relationship is also found to be asymmetrical, where the retarding effect of falling tourism receipts is significantly stronger than the stimulus effect associated with increasing tourism receipts. Significant non-linear effects are also found in each adjustment pathway. In terms of policymaking, while this study confirms that investing in tourism can be an effective way of promoting economic growth, efforts should also be made to diversify both the tourism sector and the wider economy to reduce exposure to downside risks.
published_date 2024-01-31T12:57:05Z
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score 11.017776

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