Tourism and economic growth in Malaysia: Evidence from tourist arrivals from ASEAN-5 countries

Abstract

This paper examined the causal relationship between tourism and economic growth in Malaysia by using panel time-series approach. Results from the panel cointegration analysis suggest the existence of cointegration between international tourism receipts and real economic growth. Results of the panel causality test based on the error correction model show Granger causality running from international tourism receipts to real economic growth indicating the existence of both short- and long-run relationship between the two. The results provide evidence of the significance contribution of tourism industryto Malaysia's economic growth justifying the necessity of public intervention in providing tourism infrastructure and facilities.