Do countries’ geographical locations moderate the tourism-led economic growth nexus in sub-Saharan Africa?

Abstract

Debates on the intricacies of tourism’s potential contribution to economic growth remain imperative and unsettled in sub-Saharan Africa (SSA). Employing dynamic models and multiple robust estimation techniques, this article empirically tests the tourism-led growth hypothesis (TLGH) in the case of SSA. Further investigations on how countries’ geographical locations influence the TLGH are conducted. With panel data – spanning from the year 2000 through 2016 – on 40 SSA countries, which were regrouped into coastal, landlocked and islands, the study establishes evidence in support of the TLGH for the full sample. After geographical classifications, tourism’s impact on economic growth is, however, observed to be significantly positive for only landlocked and coastal countries. Surprisingly, the impact of tourism on economic growth is significantly negative for islands within the subregion. The findings hold policy implications for the pursuit of tourism-led growth in the SSA region.

Importing to feed international tourists: Growth implications for islands across the globe

“…Augmenting earlier models (as adopted from Baidoo et al, 2021;Cannonier & Burke, 2019;Fauzel et al, 2016;Yazdi et al, 2017), Equation (3) below seeks to estimate the unconditional effects of merchandise importations on economic growth, while passively revisiting the tourism-led growth hypothesis, this time, in the case of global islands. Similarly, Equations ( 4) to ( 6) respectively aim to investigate the interactive "net effect" of international tourist arrivals and merchandise importations on growth; the growth implication of merchandise importations in the case of tourism-dependent (over-reliant) islands; and the growth implication of tourism in the case of islands that over-rely on imported merchandises.…”

“…Diverse mechanisms have been embraced as potential paths through which economic growth diffuses from tourism. For instance, tourism has been applauded as a significant foreign exchange earner; helping to spur investments in infrastructure in host countries; stimulating ripple economic effects on other industries; generating employment; and assisting in the transfer of technical knowledge (Baidoo et al, 2021;World Travel and Tourism Council (WTTC), 2013;Schubert et al, 2011).…”

“…Islands, defined by UNCTAD Handbook of Statistics (2005) and Baidoo et al (2021) as sovereign countries that are fully located within oceans, tend to benefit in huge proportions from tourism, given that the sector is usually a top priority within such economies. In line with this, Durbarry (2004) observed that tourism is the highest exchange earner for about one-third of developing islands across the globe.…”

“…In addition, the large influx of tourists who periodically visit these islands put heavy strains on water resources for both domestic and commercial uses. Consequentially, traditional activities such as crop planting, animal farming, fishing and forestry reserves that serve as the main sources of foodstuffs and merchandises on these islands are jeopardised, leaving the islands no option than to rely on importations for such basic inputs (Baidoo et al, 2021). Not surprising at all, the local establishments tend to depend materially on imported merchandises as their inputs.…”

“…[Insert Figure 1 Here] Although earlier studies including Baidoo et al (2021), Sinclair-Maragh and Gursoy (2015), Milne (1992Milne ( , 1990, Archer (1982), Britton (1980), and Varley (1977) have jointly alluded that heavy reliance on imported consumable merchandises by islands to sustain tourism industries may potentially spurs welfare deteriorations among the indigenes, to the best of our knowledge, there is not a single empirical attempt to assess whether or not such a claim is valid. This current situation has left policy makers and tourism development planners across the globe, and among sovereign islands in particular, in an unpopular state of uncertainty on this particular angle of the debate.…”