International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss


An Analysis of the Relationships between Tourism Development and Foreign Direct Investment: An Empirical Study in elected Major Asian Countries
Norlida Hanim Mohd Salleh, Redzuan Othman, Tamat Sarmidi

This study analyses the relationship between the development of tourism industry (ARR) and foreign direct investment (FDI) in  Asian countries namely Malaysia, Singapore, Thailand, China and Hong Kong utilizing autoregresive distributed lag approach (ARDL.) This approach allows the usage of stationary data at various levels, i.e. I(1) and I(0) and may be applied on small sample size and provide the long and short-run empirical results simultaneously. The result indicates that there is cointegration/long-run relationship between variables for all countries under study. However, the ARR is found to be more significant as compared to the FDI in affecting dependent variables, besides being more elastic. In the short run, it is found that Hong Kong has a bidirectional relationship between the ARR and FDI. As for Malaysia and Thailand, there is a unidirectional relationship between ARR and FDI; while for Singapore and China, there is no relationship between these two variables.

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