Tourism and economic growth in Australia: an empirical investigation of causal links

This paper seeks to determine whether tourism has promoted economic growth in Australia during the last two decades. Specifically, it uses Granger Causality analysis to explore the relationship between (i) tourism expenditure and gross domestic product and (ii) tourism expenditure and expenditure on other factors known to be associated with tourism demand. According to the results, there is a hi-causal link between tourism and economic growth, indicating the possible existence of tourism-led endogenous growth. The results also suggest that food expenditure (specifically expenditure in restaurants, cafes and takeaways) may be the key to growth in the tourism sector. Evidently, expenditure in this sector may facilitate the growth of other industries through the local market, thus kick-starting a system of endogenous growth via tourism.