This paper investigates the causal link between foreign direct investment and tourism in China by employing the Granger causality test under a VAR framework proposed by Zapata and Rambaldi (1997). Only a one-directional causality is found from foreign direct investment to tourism. This explains the rapid growth in the tourism market in China during the past decade.
Get full access to this article
View all access options for this article.
References
1.
AkaikeH. (1974), ‘A new look at statistical model identifications’, IEEE Transitions on Automatic Control, Vol 19, pp 716–723.
2.
China Statistical Information and Consultancy Service Centre, China Monthly Statistics, various issues, China Statistics Press, Beijing.
3.
ContractorF.J.KunduS.K. (1995), ‘Explaining variation in the degree of internationalisation across firms: The case of the hotel industry’, Journal of International Management, Vol 1, No 1, pp 87–123.
DunningJ.H.KunduS.K. (1995), ‘The internationalization of the hotel industry – some new findings from a field study’, Management International Review, Vol 35, No 2, pp 101–133.
6.
DunningJ.H.McQueenM. (1981), ‘The eclectic theory of international production: A case study of the international hotel industry’, Managerial and Decision Economics, Vol 2, No 4, pp 197–210.
7.
EndersW. (1995), Applied Econometric Time Series, John Wiley and Sons, New York.
8.
EngleR.F.GrangerC.W.J. (1987), ‘Dynamic model specification with equilibrium constraints: Co-integration and error correction’, Econometrica, Vol 55, No 3, pp 251–276.
9.
GrangerC.W.J. (1986), ‘Developments in the study of co-integrated economic variables’, Oxford Bulletin of Economics and Statistics, Vol 48, pp 213–228.
10.
GujaratiD. (1995), Basic Econometrics, 3rd edition, McGraw-Hill, New York.
11.
GuptaV.K. (1983), ‘A simultaneous determination of structure, conduct and performance in Canadian manufacturing’, Oxford Economic Papers, Vol 35, pp 281–301.
12.
HyllebergS.EngleR.GrangerC.YooB. (1990), ‘Seasonal integration and co-integration’, Journal of Econometrics, Vol 44, pp 215–238.
13.
KulendranN.WilsonK. (2000), ‘Modelling business travel’, Tourism Economics, Vol 6, No 1, pp 47–59.
14.
KunduS.K.ContractorF.J. (1999), ‘Country location choices of service multinationals – an empirical study of the international hotel sector’, Journal of International Management, Vol 5, No 4, pp 299–317.
15.
LewA.A.YuL. (1995), Tourism in China: Geographic, Political, and Economic Perspective, Westview Press, Oxford.
16.
LimC. (1997), ‘An econometric classification and review of international tourism demand models’, Tourism Economics, Vol 3, No 1, pp 69–81.
17.
MosconiR.GianniniC. (1992), ‘Non-causality in co-integrated system: Representation estimation and testing’, Oxford Bulletin of Economics and Statistics, Vol 54, pp 399–417.
18.
PerronP. (1989), ‘The great crash, the oil price shock, and the unit root hypothesis’, Econometrica, Vol 57, pp 1361–1401.
19.
PoirierR.A. (1997), ‘Political risk analysis and tourism’, Annuals of Tourism Research, Vol 24, No 3, pp 675–686.
20.
SanfordD.M.DongH. (2000), ‘Investment in familiar territory: Tourism and new foreign direct investment’, Tourism Economics, Vol 6, No 3, pp 205–219.
21.
ShanJ.WilsonK. (2001), ‘Causality between trade and tourism: Empirical evidence from China’, Applied Economics Letters, Vol 8, pp 279–283.
22.
SimsC.A. (1980), ‘Macroeconomics and reality’, Econometrica, Vol 48, pp 1–49.
23.
SimsC.A.StockJ.H.WatsonM.W. (1990), ‘Inference in linear time series models with some unit roots’, Econometrica, Vol 58, pp 113–144.
24.
SchwarzG. (1978), ‘Estimating the dimension of a model’, Annals of Statistics, Vol 8, pp 461–464.
25.
SongH.RomillyP.LiuX. (1997), ‘An empirical study of outbound tourism demand in the UK’, paper presented at the 17th Annual Symposium on Forecasting, Barbados, 19–21 June.
26.
State Statistical Bureau of China (SSBC), China Statistical Yearbook 1980–2000, China Statistics Press, Beijing.
27.
State Tourism Department of China (STDC), China Tourism Yearbook 1989–2000, China Tourism Press, Beijing.
28.
TisdellC.A. (1996), ‘Tourism development in China: Its nature, the changing market and business opportunities’, Journal of Vacation Marketing, Vol 2, No 2, pp 123–136.
29.
TisdellC.WenJ. (1991), ‘Investment in China's tourism industry: Its scale, nature, and policy issues’, China Economic Review, Vol 2, No 2, pp 175–193.
30.
TodaH.Y.PhillipsP.C.B. (1993), ‘Vector autoregressions and causality’, Econometrica, Vol 61, No 11, pp 1367–1393.
31.
WenJ.TisdellC. (1996), ‘Spatial distribution of tourism in China: Economic and other influences’, Tourism Economics, Vol 2, No 3, pp 235–250.
32.
WittS.WittC.A. (1995), ‘Forecasting tourism demand: A review of empirical research’, International Journal of Forecasting, Vol 11, pp 447–475.
33.
XuG. (1999), Tourism and Local Economic Development in China: Case Studies of Guilin, Suzhou and Beidaihe, Curzon, Richmond.
34.
ZapataH.O.RambaldiA.N. (1997), ‘Monte Carlo evidence on co-integration and causation’, Oxford Bulletin of Economics and Statistics, Vol 59, No 2, pp 285–298.