Exploring the Synergy Between Tourism and Economic Development in Pakistan
DOI:
https://doi.org/10.31181/sa21202413Keywords:
Cointegration, Causality, Economic growth, TourismAbstract
Underdeveloped nations can get far more from tourism than just financial gains. It promotes cultural exchanges and infrastructure development in addition to jobs and income. The industry does more than just construct hotels; it also promotes regional customs and helps small businesses. This study uses time series data from the World Development Indicator (WDI) to examine the long-term association between tourism and economic growth in Pakistan from 1995-2012. The Augmented Dickey-Fuller (ADF) test is used at the start of the analysis to find possible unit root problems in the dataset. Using the Johnson cointegration technique, cointegration is demonstrated, confirming a strong and ongoing relationship between Pakistan's tourism industry and economic growth. The derived long-term tourist coefficient highlights a strong positive correlation with economic expansion. According to Granger Causality testing, GDP and tourism have a unidirectional causal relationship. These empirical results highlight tourism's critical role in promoting economic growth and the possibility of a positive feedback loop between the two. The study recommends that authorities take specific actions to support Pakistan's tourist industry in light of these findings. The development of infrastructure, marketing campaigns, and legislative frameworks that support the expansion of tourism are a few examples of such interventions. The study offers significant perspectives for well-informed policy development, advocating for proactive approaches to fully capitalize on the economic advantages of Pakistan's flourishing tourism sector.
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