Authors: Mehmet Balcilar, ReneƩ van Eyden, Roula Inglesi-Lotz & Rangan Gupta

Keyword: economic growth, sustainable tourism, South Africa


Agenda 2063: A1

The causal link between tourism receipts and GDP has recently become a major focus in the tourism economics literature. Results obtained in recent studies about the causal link appear to be sensitive with respect to the countries analysed, sample period and methodology employed. Considering the sensitivity of the causal link, we use the rolling window and time-varying coefficient estimation methods to analyse the parameter stability and Granger causality based on a vector error correction model (VECM). When applied to South Africa for the 1960-2011 periods, the findings are as follows: results from the full sample VECM indicate that there is no Granger-causality between the tourism receipts and GDP, while the findings from the time-varying coefficients model based on the state-space representation and rolling window estimation technique show that GDP has no predictive power for tourism receipts; however, tourism receipts have positive-predictive content for GDP for the entire period, with the exception of the period between 1985 and 1990.