AIR-TRANSPORTATION, TOURISM AND ECONOMIC GROWTH INTERACTIONS IN SRI LANKA: COINTEGRATION AND CAUSALITY ANALYSIS

Madurapperuma, Wasanth; Higgoda, Ruwan

AIR-TRANSPORTATION, TOURISM AND ECONOMIC GROWTH INTERACTIONS IN SRI LANKA: COINTEGRATION AND CAUSALITY ANALYSIS

WASANTH MADURAPPERUMA, RUWAN HIGGODA

Abstract:

Air travel growth is one of the notable responsibilities of a government specifically for an economy which depends heavily on tourism. Air travel strengthens destinations by enhancing connectivity, arrivals and other tourism reactions therefore it is recognized as a medium of revenue generation, work opportunity creation and sustainable business development. The aim of this study is to examine the causal relationship between tourism, air travel and economic growth in Sri Lanka for period of 1983-2019. The study employs the Cointegration and Granger causality approach. The results confirm that there is a stable uni directional relationship running from air transportation to economic growth in the short run bidirectional causality exists between air travel and tourism growth in Sri Lanka. The findings suggested that policymakers do not over-rely on air transportation for economic growth and that they pay more comprehensive attention to integrate the air transportation and tourism growth. It recommends policy makers to develop integrated strategies that connect air travel, tourism and economic growth.

Keywords:
Air travel; Tourism, Tourist arrivals, Economic growth (GDP), Cointegration, Vector Error Correction Model; Causality

DOI: 10.20472/BM.2020.8.1.005

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APA citation:
WASANTH MADURAPPERUMA, RUWAN HIGGODA (2020). AIR-TRANSPORTATION, TOURISM AND ECONOMIC GROWTH INTERACTIONS IN SRI LANKA: COINTEGRATION AND CAUSALITY ANALYSIS. International Journal of Business and Management, Vol. VIII(1), pp. 85-107. , DOI: 10.20472/BM.2020.8.1.005