The contribution of tourism development to economic growth in the Korean economy

Abstract

This study investigates the causal relations between tourism growth and economic expansion for the Korean economy by using Engle and Granger two-stage approach and a bivariate Vector Autoregression (VAR) model. Two principle results emerge from this study. First, the results of a cointegration test indicate that there is no long-run equilibrium relation between two series. Second, the outcomes of Granger causality test imply the one-way causal relationship of economic-driven tourism growth. The hypothesis of tourism-led economic growth is not held in the Korean economy. This consequence is supported by testing the sensitivity of causality test under different lag selections along with the optimal lag.