Investigating the Impact of International Tourist Arrivals on Economic Growth under Environmental Hazards in Malaysia

Abstract

Tourist receipts is a crucial determinant in Malaysian economic growth. However, environmental hazards due to climate change is perceived as potential threats to tourism. This paper aims to understand the effect of environmental hazards on the international tourist arrivals in Malaysia. Malaysian monthly data was analyzed using the linear regression approach to examine the tourism-led economic growth. Granger Causality Test is employed to test for directional cause analysis among variables. Overall results also show that an increase in environmental hazards that moderated with international tourist arrivals leads to a lower Malaysian economic growth in Malaysia. Meanwhile, better air quality boosts the number of international tourist arrivals, hence stimulates Malaysian economic growth. Granger causality results indicate that there exists a bidirectional cause between international tourist arrivals and climate change (temperature, and thunderstorm) but a unidirectional causality exists between international tourist arrivals and economic growth, carbon emission, air quality and rainfall, respectively. Effective mitigation of climate change needs to be implemented by the authorities to reduce the environmental risk.