Foreign Direct Investment and Tourism Development in Africa

Ogechi Adeola, Nathaniel Boso, Ellis L. C. Osabutey, Evans Olaniyi

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This study examines the nexus between foreign direct investment (FDI) inflow and tourism development. Using annual data for 44 countries in Africa from 1995 to 2014, and three different specifications of panel autoregressive distributed lag model, the study investigates short-run and long-run dynamics between FDI and tourism development. The study finds a significant positive relationship and a bidirectional long-run causality between FDI inflows and tourism development. In addition, the results show a negative short-run relationship between exchange rate and tourism development. Furthermore, there is evidence that economic growth and political stability are important determinants of tourism development on the African continent. A major policy implication is that creating a politically stable environment and sustaining a growing economy will help attract FDI inflows to boost tourism development.
Original languageEnglish
Pages (from-to)395-408
JournalTourism Analysis
Early online date31 Jul 2020
Publication statusE-pub ahead of print - 31 Jul 2020

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