Examining tourism-led growth hypothesis for India

The impact of international tourism on a country's economic growth has attracted a great deal of attention among economists and policy makers. This study probes tourism-led growth (TLG) hypothesis for India employing bounds test and Johansen approaches of cointegration using annual data for the time span from 1980 to 2006 in a multivariate framework. Empirical results reveal the absence of a long-term equilibrium relationship between international tourist arrivals and economic activity in India. It also fails to establish any short-run relationship between international tourist arrivals and economic growth in an unrestricted vector autoregression framework. Thus, this study rejects TLG hypothesis for India.