Dynamic inter-relationship among international tourism, economic growth, and energy consumption in Taiwan

In 2010, due to government regulatory easing to mainland Chinese tourism, Taiwan’s economic growth increased by 10.88% from the previous year, producing the highest real gross domestic product (GDP) growth rate since 1987. However, mass tourism can lead to possible degradation of the environment and exhaustion of natural resources. Facing the challenges of future energy scarcity and global warming, this study uses Granger causality analysis to examine the causal relationships among international tourism development, economic growth, and energy consumption in Taiwan from 1965 to 2010. The study presents three principal test results. First, there is no reciprocal causal relationship between economic growth and international tourism development. As a result, this study does not support the tourism-led growth hypothesis. Second, this study identifies bidirectional causality between economic growth and energy consumption. Third, this study shows bidirectional causality between international tourism development and energy consumption. In particular, one of the indicators for tourism development, the international tourist arrivals, Granger causes more with energy consumption than visitor expenditures. From an energy conservation perspective, these results suggest authorities to focus on increasing the volume of visitor expenditures rather than international tourist arrivals caused from operating low-budget travels when promoting international tourism. © 2016, UK Simulation Society. All rights reserved.