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This study examines whether FDI has asymmetric effects on tourism demand in China over the period 1982–2017. The non-linear autoregressive distributed lag approach is applied to examine asymmetric cointegration. Structural breaks are identified with the Bai-Perron test. Substitute prices are identified using principal component analysis (PCA). Causality is examined using the Toda-Yamamoto approach. The results indicate that a 1 percent increase in FDI increases tourism demand by 0.22 percent, whereas a 1 percent decrease in FDI decreases tourism demand by 0.54 percent. Unidirectional causality from FDI to tourism is noted. The contribution is reflected in the asymmetric association between FDIs and tourism in China. Specifically, tourism demand is 2.5 times more sensitive to declines in FDI compared to increases. The results provide useful insights for policymakers managing tourism sector FDI. [ABSTRACT FROM AUTHOR]

Fiji's tourism industry has evolved significantly over the past 3 decades with past and present governments striving to support the development of the sector. In this study, we test the association between tourism measured by international visitor arrivals and Fiji's real exchange rate using annual data over the period 1980–2018. Structural breaks are identified with the Gregory-Hansen test, and cointegration is confirmed with the Bayer-Hanck test. Nonlinear estimation is conducted with the nonlinear ARDL model. The results indicate that a 1% increase in tourism appreciates the real exchange rate by 0.42% whereas a 1% decrease however would depreciate the real exchange rate by about 0.32%. The findings raise concerns parallel to the Dutch Disease models and has implications for the measurement of tourism prices in tourism demand models. [ABSTRACT FROM AUTHOR]

In this paper, we examine asymmetric effects of tourism on economic growth in Papua New Guinea (PNG) using quarterly data from 2008Q1 to 2019Q4 (n = 48). The asymmetric nonlinear autoregressive distributed lag (NARDL) model is utilized for this purpose. Causality testing is conducted with an asymmetric VAR model. Estimates from the NARDL model reveal that periods of tourism expansion are positively associated with economic growth. Negative shocks of tourism have an insignificant effect on economic growth. The estimates provide some support for the tourism-led growth hypothesis but only for tourism expansions confirming the asymmetric relationship. [ABSTRACT FROM AUTHOR]

Structural breaks represent periods of turmoil that may influence how tourism affects economic growth. Current research on the tourism-led growth hypothesis (TLGH) measures the effect of structural breaks using dummy variables in regression models. However, the drawback of this approach is that there could be multiple structural breaks which result in an overfitting problem and reduce degrees of freedom in small samples. It also becomes difficult to isolate the effect of individual breaks when multiple structural breaks occur within the same year. We thus highlight the role of the Fourier ARDL model in addressing these shortcomings. We use three Pacific Island Countries: Fiji, Tonga, and Vanuatu as case studies to evaluate the efficacy of the Fourier ARDL model. Contrary to earlier research, our results indicate that tourism does not always lead to economic growth. Appropriate modelling of structural breaks also influences the outcome of asymmetric effects. These findings imply that future research should pay close attention to the effects of structural breaks in the TLGH. [ABSTRACT FROM AUTHOR]

A recent critique of the tourism-growth literature raises concerns about whether tourism leads to permanent economic growth. We argue that tourism can be linked to total factor productivity. Tourism demand spurs efficiency gains in the tourism sector through learning by doing. However, because tourism is demand-led, asymmetric effects may arise in the tourism-productivity association. To model the permanent growth effects of tourism, we use panel asymmetric ARDL models with annual data from 94 countries over the period 1995–2018. The finding implies that tourism has permanent but asymmetric growth effects. [ABSTRACT FROM AUTHOR]

Research indicates that remittances have mixed effects on growth. In this study, we investigate the role of income thresholds in this association for Fiji. Income thresholds are measured by thresholds in per-worker real GDP and are identified using the self-exciting threshold autoregression model over the period 1980 to 2017. A threshold autoregressive distributed lag model is subsequently developed. A single threshold in per-worker real GDP is estimated at US$5891. Remittances promote growth if income exceeds the threshold but is negative otherwise. Hence, remittances support growth-enhancing activities at high-income levels but may finance imports at the expense of domestic production at lower income levels. [ABSTRACT FROM AUTHOR]

This paper studies the economic impact of COVID-19 in Fiji, Tonga, and Vanuatu. The UNWTO's International Tourism 2020 Scenarios and the World Bank's projected decline in remittance flows are treated as negative COVID-19 led shocks in the nonlinear autoregressive distributed lag (NARDL) model. Negative tourism shocks are significant for all three countries, whereas negative remittance shocks are significant for Tonga only. Thus, the economic effects of COVID-19 are propagated by tourism for all three countries, whilst remittance is a COVID-19 transmission channel for Tonga only. Simulations with the projected declines in tourism and remittances suggest that Vanuatu would experience the greatest decline in growth and highest uncertainty, whilst Tonga would face the lowest decline and uncertainty. [ABSTRACT FROM AUTHOR]