The nexus between tourism, financial development, and economic growth: Evidence from African countries

This paper examines the nexus between tourism, financial development and economic growth in 31 African countries using the Dumitrescu-Hurlin Granger non-causality test that accounts for heterogeneity and cross-sectional dependence. It also employs the Granger causality test in the frequency domain that distinguishes between temporary and permanent causality for the country-specific analysis. It shows a cointegration relationship between tourism, financial development and economic growth. It reveals a joint long-run causality from tourism and financial development to economic growth, and a joint short-run and long-run causality from tourism and economic growth to financial development, albeit the joint causality from financial development and economic growth to tourism is tenuous. The individual causality shows a bidirectional causality between tourism and economic growth, between financial development and economic growth, and between tourism and financial development. The country-specific analysis reveals that tourism is a significant predictor of financial development and economic growth at high frequency rather than at low frequency in most countries. Therefore, African countries should prioritize the policies and programs that can facilitate the development of the tourism and financial sectors in their quest to accelerate economic growth and development.