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An Empirical Analysis of the Impact of Foreign Direct Investment on Tourism Development: The Mauritian Case

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This article investigates the link between foreign direct investment (FDI) and tourism development for the case of the small island economy of Mauritius for the period 1980–2015. The research employs a dynamic time series econometrics framework, namely a vector error correction model (VECM), to account for potential dynamic and endogenous relationship in the FDI–tourism nexus. Analysis of the finding shows that FDI has a positive and significant effect, albeit relatively lower compared to the other classical factors of tourism development, in the long run. Interestingly, a bicausal effect is observed in the long run while an indirect link between FDI and tourism development via the economic growth channel is found.
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Keywords: FOREIGN DIRECT INVESTMENT (FDI); TOURISM DEVELOPMENT; VECTOR AUTOREGRESSIVE (VAR)/VECTOR ERROR CORRECTION MODEL (VECM)

Document Type: Research Article

Publication date: November 13, 2019

This article was made available online on August 13, 2019 as a Fast Track article with title: "An Empirical Analysis of the impact of FDI on Tourism development - The Mauritian Case".

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  • The aim of Tourism Analysis is to promote a forum for practitioners and academicians in the fields of Leisure, Recreation, Tourism, and Hospitality (LRTH). As a interdisciplinary journal, it is an appropriate outlet for articles, research notes, and computer software packages designed to be of interest, concern, and of applied value to its audience of professionals, scholars, and students of LRTH programs the world over.
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