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1 – 3 of 3Based on a panel vector error correction model (PVECM), this study aims to investigate the impact of foreign direct investment (FDI) on tourism development in a selected group of…
Abstract
Purpose
Based on a panel vector error correction model (PVECM), this study aims to investigate the impact of foreign direct investment (FDI) on tourism development in a selected group of 17 small island economies during 1995-2018. In the long run, a positive and direct relationship was found between foreign investment and tourists’ arrival. Moreover, economic performance and tourists’ income were also found to be key determinants of tourism development. It is further observed that there is bidirectional causality between the two variables. Hence, one can argue that FDI is a key element for tourism development. So, if the countries can attract more FDI and grow economically, these elements will contribute positively to the sector in the future.
Design/methodology/approach
This work uses rigorous dynamic time series analysis, namely, a dynamic PVECM, which takes into account dynamism and endogeneity issues in tourism modelling. Furthermore, the PVECM is also appropriately suited for integrating short- and long-run analysis.
Findings
The results confirm that FDI has been an important ingredient in the tourism development of the island economies in the long run. Interestingly, a bidirectional causality between FDI and tourism development is validated. Moreover, growth will as well be important. So, if the country can attract more FDI and grow economically, these elements will attract the tourists of the future.
Originality/value
Relatively few studies have rigorously studied the relationships between FDI and tourism development, particularly with respect to developing countries and small island states which rely heavily on tourism as well as FDI. As such existing research has neglected dynamic and reverse causality analysis in their respective FDI-tourism modelling. This study thus attempts to address the above and supplement the literature by investigating the direct and indirect relationship between FDI and tourism development for the case of small island economies over the period 1995-2018. Moreover, the implication of foreign capital inflows on tourism futures will as well be developed.
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Keywords
The present study investigates the extent to which technological progress influences trade in the Common Market for Eastern and Southern Africa (COMESA) region over the period…
Abstract
Purpose
The present study investigates the extent to which technological progress influences trade in the Common Market for Eastern and Southern Africa (COMESA) region over the period 1990–2017.
Design/methodology/approach
Methodologically, this study uses a rigorous dynamic analysis namely a dynamic vector error correction model (PVECM) to carry out the proposed investigation. Such a procedure ensures that the dynamic behaviour under consideration is properly captured, while simultaneously catering for causality issues.
Findings
The results show that technological progress has had a positive and significant effect on trade for the sample of countries in the COMESA region over the years of studies. Also, the long-run results show that local investment and economic growth have a positive impact on international trade. Furthermore, the short-run estimates allowed us to make further analysis of the results. For instance, it is observed that trade as well results in technological progress as per the study. Hence, there is reverse causation or bi-directional causality between trade and technological progress.
Originality/value
Very few research studies have been conducted on the link between technological progress and trade in a macroeconomy. The analysis thus is believed to supplement the dwarf literature on the technological progress and trade nexus by bringing additional evidence from COMESA.
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Zameelah Khan Jaffur, Boopen Seetanah, Verena Tandrayen-Ragoobur, Sheereen Fauzel, Viraiyan Teeroovengadum and Sonalisingh Ramsohok
This study aims at evaluating the effect of the COVID-19 pandemic on the export trade system for Mauritius during the first half of 2020 (January 2020–June 2020).
Abstract
Purpose
This study aims at evaluating the effect of the COVID-19 pandemic on the export trade system for Mauritius during the first half of 2020 (January 2020–June 2020).
Design/methodology/approach
An initial analysis of the monthly export time series data proves that on the whole, the series have diverged from their actual trends after the outbreak of the COVID-19 pandemic: observed values are less than those predicted by the selected optimal forecast models. The authors subsequently employ the Bayesian structural time series (BSTS) framework for causal analysis to estimate the impact of the COVID-19 pandemic on the island's export system.
Findings
Overall, the findings show that the COVID-19 pandemic has a statistically significant and negative impact on the Mauritian export trade system, with the five main export trading partners and sectors the most affected. Despite that the impact in some cases is not apparent for the period of study, the results indicate that total exports will surely be affected by the pandemic in the long run. Nevertheless, this depends on the measures taken both locally and globally to mitigate the spread of the pandemic.
Originality/value
This study thus contributes to the growing literature on the economic impacts of the COVID-19 pandemic by focussing on a small island economy.