Tourism, trade, and income: evidence from Singapore

This paper examines the short-run and long-run dynamic interactions between exports, imports, international tourism, and economic growth for Singapore using annual data over 1980–2007. Since the sample size is relatively small, the long-run relationship of these variables is investigated with the bounds test. Granger causality test is then used to examine the dynamic interactions of these variables. The results suggest that the dynamic interactions of these four variables are complex. The results support growth-led tourism, tourism-led imports, and export-led tourism hypotheses in the short run. The results also show that imports have positive effects on economic growth in the long run. It is also found that tourism has indirect effects on economic growth in the long run through import activities. There is a bidirectional causal relationship between exports and income, which, in turn, affects the tourism industry.