Tourism Development and Economic Growth

We examine the long-run relationship between tourism development and economic growth using the Nonlinear Autoregressive Distributed Lag (NARDL) model for Bangladesh using annual data from 1980 to 2016. We find an asymmetric relationship between tourism and Bangladesh’s economy since a 1% increase in tourism receipt increases economic growth by about 0.19%. On the contrary, due to a 1% decline in the tourism receipt, economic growth will decrease by about 0.66%. So, the decline in tourism receipt will have a higher negative impact on economic growth than the increase in the tourism receipt in Bangladesh, which result is important for current pandemic situation in tourism due to Covid-19. We also reveal that the impact of positive change in the tourism revenue on GDP stabilizes around 8 years; however, an adverse change on GDP does not stabilize in 15 years. We recommend that a systematic allocation of resources is required to promote and stimulate the tourism industry in Bangladesh for a favourable impact on the country’s long-run economic development.