The causal relationship between tourism and international trade in some Islamic countries

Abstract EN

This study examines the causal relationship between the number of tourists and different measures of trade; namely, exports, imports, and total trade in real terms in a number of Islamic countries based on the availability of data using Cointegration and Granger causality techniques.

The Cointegration tests indicated the existence of a long run equilibrium relationship between the number of tourists and different measures of trade in the cases of Benin, Egypt, Jordan, Syria, and Tunisia, while there are no Cointegration in the case of Pakistan, Morocco, Turkey, and Malaysia.

The Granger causality tests gave mix results.

The results indicated that there are no causality relationship between the number of tourists and the different measures of trade in the case of: Benin, Pakistan, Morocco, Tunisia, and Turkey.

However, there exists a unidirectional causality relationship from the number of tourists to imports in the case of Egypt, Syria, and Malaysia.

Also, the results indicated the existence of unidirectional causality from exports to the number of tourists in the case of Malaysia only.

Furthermore, in the case of Jordan, there exists a bi-directional causality between imports and the number of tourists on one hand and between total trade and the number of tourists on the other hand.

Although the results tend to differ across countries, the study indicates the existence of a causal relationship from the number of tourists to imports in a number of countries.

These results imply that the production base in these countries is insufficient, which leads to an increase in imports to satisfy the tourist demand and undermine the ability of the tourism sector to support exports.

Both effects can explain the continuing balance of payments deficits observed in most of these countries.