Abstract:
The contribution of the tourism industry to the economic growth of Sri Lanka is very important. It
is a vital segment of the Sri Lankan economy. The purpose of this study is to explore the
contribution of tourism to the economic growth of Sri Lanka. The Autoregressive Distributed Lag
bounds testing approach is used as the analytical process to find the long-run and short-run behaviors
between the Sri Lankan tourism industry and economic growth using three variables real gross
domestic product, international tourist arrivals, and real effective exchange rate. Altogether, this
analysis reveals that in both the short run and long run, tourism positively impacts the economic growth
of Sri Lanka. Thus, it is important for the Sri Lanka government to focus on the development of tourism
infrastructure and proving political solutions, resolving conflicts which make negative consequences
on Sri Lanka tourism industry.
