The asymmetric impact of tourism on economic growth: empirical evidence from Madagascar

Ramaharo, Franck M. (2025): The asymmetric impact of tourism on economic growth: empirical evidence from Madagascar.

Abstract

This paper examines the asymmetric relationship between tourism development and economic growth in Madagascar using the Nonlinear Autoregressive Distributed Lag (NARDL) model and annual data spanning 1984-2024. Our analysis reveals a statistically significant, long-run asymmetric impact. Negative changes in tourist arrivals exert a substantially stronger adverse effect on economic growth than the positive effect of equivalent increases. Furthermore, we investigate both symmetric and asymmetric causal linkages between tourism and economic growth. The symmetric causality analysis detects neither bidirectional nor unidirectional causality. This result, therefore, provides support for the neutrality hypothesis in Madagascar. However, the asymmetric causality test uncovers unidirectional effects running from economic growth to tourism. Specifically, positive shocks to economic growth Granger-cause subsequent negative shocks to tourism, while negative shocks to economic growth Granger-cause subsequent positive shocks to tourism. This pattern, which is consistent with the asymmetric conservation hypothesis, along with our empirical findings, collectively cautions against treating tourism as a primary engine of economic growth in Madagascar. Instead, our results highlight tourism's vulnerability to macroeconomic and financial instability and underscore the need for policies that stabilize the broader economy to ensure sustained tourism performance.

• Item Type: MPRA Paper
• Language: English
• Keywords: tourism development; economic growth; financial development; Madagascar; asymmetric analysis; Nonlinear Autoregressive Distributed Lag modeling
• Subjects: L - Industrial Organization > L8 - Industry Studies: Services > L83 - Sports ; Gambling ; Restaurants ; Recreation ; Tourism; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence

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