Abstract:
Tourism industry is found as the second rapidly
growing business after the information and communication
technology in the global arena. A number of economies are
triumphant in marketing their tourism destinations along with the
generation of a considerable amount of foreign currency earnings
due to the origination of tourism industrial sector. After economic
reforms initiated in Sri Lanka in year 1977 onwards, the
governments have thereafter implemented a number of various
fruitful policies and development projects so as to promote the
tourism industrial sector in pursuit of economic growth and
development. This study investigates the Contribution of Tourism
and Foreign Direct Investment (FDI) to Gross Domestic
Production (GDP) in Sri Lanka. The software such as EViews 10,
Excel, and Minitab are used to analyze the data. To achieve its
goal, the nonparametric approaches such Nearest Neighbor Fit,
Kernal Fit, and Confidence Ellipse to find the relationship were
used in this study. Error Correction Mechanism, Co-Integration,
and Analysis of Causality are the econometric techniques used to
find the relationship. This study employs annual data for the
period from 1977 to 2017and forecasted the data from 2018 to
2022 in order to find out the future potential of the contribution.
The co-integration regression result revealed that the relationship
between Tourism Receipts and Gross Domestic Production has
been positively and statistically significant. The Foreign Direct
Investment and Gross Domestic Production have been positively
and statistically significant. However short run effect impact
multiplier of Tourism Receipts is statistically not significant but
Foreign Direct Investment statistically significant. The results of
Granger Causality tests, in the variables are one-way causal
relationships. According to the results of this study suggests that it
is vital for Sri Lankan government to implement some of the
marketing efforts to develop the tourism industrial sectors as one
of the best destinations in Asian region.
