The Contribution of Tourism to Economic Growth: “A Case Study from the United Arab Emirates(UAE)”

Abstract

UAE is the fastest growing economy in Gulf Cooperation Council Countries (GCCC) has been widely focused on diversifying its economy. Tourism as an industry has increased its importance, especially in recent years. The present study emphases on tourism and its impact on the economic growth of the United Arab Emirates. The purpose of the analyses cointegration and Granger causality approach has been employed. The data covered in the study is between 1990-2017 on annual basis at their natural log. All the series were stationary at first difference and integrated at order (I). The cointegration results show a long-run relation between tourist arrival and GDP, capital formation, and tourist receipt. The results were validated by the Granger causality test in the case of tourist arrival with tourism receipt and capital formation. However, the results could not be confirmed between tourist arrival and GDP. The results contribute to the policymakers the importance of increasing tourism as there is long- and short-term relationship between receipt and tourist arrival.

 Keywords— Economic growth, tourist arrival, Co-integration, Granger causality, capital formation, and the UAE.