Examining the Tourism-led Growth Hypothesis: A Case Study of Thailand

Abstract

The examining the tourism-led growth hypothesis (TLG) in the case of Thailand, using Johansen approach, ARDL bounds test, and Granger causality test under two different time periods. The first period, 1960-1979, is the era of product development while the second period, 1980-2012, is the result of the development in the first period. The results of the study show that continuous tourism development policies of Thailand over half a century, 1960-2012, recently achieved to led economic growth in the past three decade (1980-2012) (accept the hypothesis of TLG). The first two decade of the development (1960-1979) is the period that economic growth led tourism expansion (reject the hypothesis of TLG). That is because this period has the investment to prepare for the expansion of tourism in the future. This study suggests that the government of Thailand should focus on the tourism development and management policy to raise the standard of Thailand tourism more than investment in physical development. As well as support the development of sectors that may have spillover effect on the tourism sector such as transportation, restaurant, real estate, shopping, etc.