Tourism development and its impact on economic growth in Pakistan.

Abstract

Abstract This chapter discusses in the first instance the development of tourism in Pakistan, delving into the government's support of it and its potential as well as the challenges of the industry. The chapter subsequently investigates the impact of tourism development on economic growth in Pakistan over the period 1980 to 2018 using a dynamic time-series analysis, namely a vector autoregressive framework, which allows for the possibility of endogeneity and causality issues. The results proved the existence of the tourism-led growth hypothesis and that tourism development has contributed to economic growth in the long run; perhaps not as much as it could have given the potential of this sector. A bidirectional causality is also reported between tourism development and economic growth, confirming the self-reinforcing nature of the tourism-growth nexus.