| Abstract: |
In this study, the relationship between tourism development and trade in 12
sub-Saharan African (SSA) countries is examined during the period 1995-2019.
Three proxies of trade are used, namely the total trade, total exports, and
total imports of goods and services to examine this linkage, thereby leading
to three separate model specifications. A wide range of modern econometric
techniques were also employed to examine the relationship between the various
proxies of trade and tourist arrivals. These include i) cross-sectional
dependence tests based on Breusch-Pagan (1980) LM, Pesaran (2004) scaled LM,
Baltagi et al. (2012) bias-corrected scaled LM, and Pesaran (2004) CD; ii) a
slope homogeneity test based on Pesaran and Yamagata (2008); iii) an ECM panel
cointegration test based on Westerlund (2007); and iv) a heterogeneous panel
causality model based on Dumitrescu and Hurlin (2012), among others. Using the
dynamic ordinary least squares (DOLS) and the fully modified ordinary least
squares (FMOLS), the study found that, overall, international tourism has a
positive and significant impact on trade in SSA countries. This finding is
also corroborated by the heterogeneous Granger causality test, which found a
distinct unidirectional causal flow from international tourism arrivals to
trade. The study, therefore, recommends that SSA countries should implement
policies aimed at promoting international tourism in order to increase their
international trade and boost their overall trade balance. |