Testing the Tourism-Led Growth hypothesis: The case of Malta

Katircioglu, S. (2009) Testing the Tourism-Led Growth hypothesis: The case of Malta. Acta Oeconomica, 59 (3). pp. 331-343. ISSN 0001-6373

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Abstract

Tourism-Led Growth (TLG) hypothesis results are inconclusive for Mediterranean countries in the relevant literature. This study contributes to the literature by employing the bounds test for co-integration and Granger causality tests to investigate level relationship and the direction of causality between international tourism and economic growth in the case of Malta. Results reveal that a long-run equilibrium relationship exists between international tourism and economic growth in the case of Malta. On the other hand, Granger causality test results suggest that both the Tourism-Led Growth and output-driven tourism hypotheses can be inferred for Malta since there is bidirectional causation between international tourism and economic growth.

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