Causality Between Tourism and Economic Development: The Case of China

Abstract

This study applies a bootstrap panel Granger causality test to examine the causal relationship between international tourism receipts and economic growth in 20 regions of China for the period from 1995 to 2015, accounting for both dependency and heterogeneity across regions. The empirical results support evidence for the growth hypothesis in the regions, such as Anhui, Henan, Hubei, Ningxia, and Shannxi. A reverse relationship supports evidence on the conservation hypothesis for the regions, such as Hunan and Inner Mongolia. A reciprocal causal relationship was found in Qinghai and Tibet, while the result of a neutrality hypothesis supported 11 of these 20 major regions (i.e., Chognqing, Gansu, Guangxi, Guizhou, Heilongjiang, Jiangxi, Jilin, Shanxi, Sichuan, Xinjiang and Yunnan).