Effect of tourism FDI and international tourism to the economic growth in Morocco: Evidence from ARDL bound testing approach

Abstract

This study examined the influence of international tourism and foreign direct investment on economic growth in Morocco during the period 1983–2018. Using autoregressive distributed lag (ARDL) approach and causality tests, the study analyzed the relationship between real GDP, tourist arrivals, foreign direct investment (FDI) flowing into the tourism sector and FDI in the others sectors. The results obtained indicate that there is a positive relationship between tourist arrivals and economic growth in the long-run. The results also show that non-tourism FDI has a positive and significant impact on economic growth, while tourism FDI has a negative effect on economic growth. In addition, long-run causality results show that the hypothesis of economic growth driven by tourist arrivals and foreign direct investment is significant at the 1% level. Similarly, our results show that in the long-run, the hypothesis of tourism demand driven by economic growth and FDI is significant at the 1% level. The Granger causality test reveals a one-way causal relationship from economic growth to tourist arrivals, FDI flows in the tourism sectors and FDI flows in the non-tourism sectors in Morocco. This study suggests that decisions-makers should align the tourism strategy with other sectoral plans in a global, coherent and integrated strategic vision to take full advantage of FDI and international tourism. Policy implications of this study and future research suggestions are also mentionned.