Tourism and Economic Growth Nexus in Tanzania: Analysis Using Autoregressive Distributed Lag (Ardl) Model.

Abstract

This study examined the cause and effect relationship between tourism and economic growth in Tanzania, where tourism is considered as an important sector of economic growth.The enquiry based on TourismLe Growth(TLGH)hypothesis which claim that, more resources are to be allocated to tourism relative to other sectors because of its cross cutting effect on economic growth. However, for the purpose of analysis; tourism has been divided into two categories (i.e. domestic and international tourism). Employed data are purely secondary, obtained from International Monetary Fund(IMF) and the World Development Indicators(WDI) database. The bounds test (ARDL) and the error correction model were applied for co-integration and causality test using annual time series data (1995- 2020). Data analysis was done through E-views version eleven. Results show that variables being investigated are co-integrated. Moreover, the findings obtained reveals presence of unidirectional causality in long run as well as in the short run. The error correction term is significant and negative as expected, this scenario confirms the long run relationship between tourism and economic growth. However, results failed to validate, the Tourism Led Growth(TLGH) hypothesis in the Tanzania context.