Tourism’s long- and short-term influence on global cities’ economic growth: The case of Hong Kong

Abstract

This research examines how tourism development has impacted economic growth in a global city–Hong Kong. A large body of research has investigated national tourism-led growth in developed and developing countries. However, many such studies have overlooked how policies aimed at fostering the development of tourism affect the local economic development of global cities. The Chinese and Hong Kong governments liberalized their visa policies with the launch of the Individual Visit Scheme in 2003. Such liberalization has led to significantly more tourist arrival from China. Our autoregressive distributed lag model of tourism-related data from 2003 to 2019 provides strong evidence that more tourism can spur short-run economic growth. Yet, such tourism can lead to uncertain effects on local economic development in the longer run. Hong Kong’s transient tourism-led growth has almost entered the stagnation stage of the Tourism Area Life Cycle model. During such stagnation, jurisdictions like Hong Kong can expect limited long-term economic growth from their tourist sector. Our findings thus sound a warning for global cities looking to tourism to sustain longer-term economic growth.