The Relationship between Foreign Direct Investment and Tourism Development: Evidence from Developing Countries

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Ahmad Jafari Samimi
Somaye Sadeghi
Soraya Sadeghi

Abstract

This paper investigates the existence of Granger causality and cointegrated relationships between tourism related Foreign Direct Investment (FDI) and tourism development in developing countries using panel VECM techniques from 1995 to 2008. The results confrm the existence of a co-integrated relationship between variables in the long run. In addition, there is a bilateral long-run causality between tourism related FDI and tourism development, while there is no short-run causality between variables.

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