Testing Tourism-led Growth Hypothesis in Laos?

Purpose - The purpose of this paper is to investigate the tourism-led growth hypothesis in Laos. Design/methodology/approach - The authors test the tourism-led growth hypothesis using autoregressive distributed lag (ARDL) cointegration estimation (Pesaran et al., 2001) and Granger causality tests. Findings - The results of this paper show that when tourism is forcing variable, there is no long-run relationship between tourism development and economic growth. The Granger causality test demonstrates that there is a uni-directional causality running from economic growth in tourism. Social implications - The empirical results and policy recommendation may be useful for other small developing countries. Originality/value - This study is the first study to investigate the relationship between tourism development and growth in Laos, using a relatively new econometric approach - ARDL bound testing