Open AccessForeign Direct Investment and Tourism Development in Africa
Author(s) -
Ogechi Adeola,
Nathaniel Boso,
Ellis L.C. Osabutey,
Olaniyi Evans
Publication year - 2020
Publication title -
tourism analysis
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.56
H-Index - 36
eISSN - 1943-3999
pISSN - 1083-5423
DOI - 10.3727/108354220x15957702910144
Subject(s) - foreign direct investment , tourism , nexus (standard) , distributed lag , economics , political stability , causality (physics) , short run , panel data , exchange rate , international economics , economic system , politics , development economics , macroeconomics , political science , econometrics , embedded system , physics , quantum mechanics , computer science , law
This study examines the nexus between foreign direct investment (FDI) inflow and tourism development. Using annual data for 44 countries in Africa from 1995 to 2014, and three different specifications of panel autoregressive distributed lag model, the study investigates short-run and long-run dynamics between FDI and tourism development. The study finds a significant positive relationship and a bidirectional long-run causality between FDI inflows and tourism development. In addition, the results show a negative short-run relationship between exchange rate and tourism development. Furthermore, there is evidence that economic growth and political stability are important determinants of tourism development. A major policy implication for African countries is that creating a politically stable environment and sustaining a growing economy help attract FDI inflows to boost tourism development.