Tourism development and economic growth in Shangri-la, China: empirical evidence from the past two decades (2001-2019)

Abstract

With the high prosperity of the global economy and the significant improvement of material life, tourism has gradually become one of the best ways and choices for people to enjoy their spiritual life. To some extent, it has become the hottest industry in the world. Its prosperity has not only brought more labor employment to more countries and regions, but also increased considerable capital and foreign exchange income. As one of the largest emerging industries, tourism plays an important role in promoting economic growth. Shangri-la is a tourism center city in Tibetan areas and a transportation hub for tourists entering and leaving Tibet. Tourism, as a leading tertiary industry in Shangri-La, plays a positive role in promoting the development of relevant industries in Shangri-La, expanding employment, promoting the adjustment of industrial structure and increasing economic income. However, due to the geographical location, natural conditions and human factors, Shangri-La still has a serious deficiency compared with other tourist cities, which is also an important problem restricting the economic growth of Shangri-La. The current study investigates the relationship between tourism development and economic growth in Shangri-La time series data techniques for the period of 2001to2019. This study will employ a simultaneous model to explain the relationship between tourism development and economic growth in Shangri-la. After obtaining stationary data data from the first step and apply to regression for Granger causality and Simultaneous equation model. As the data is quite small, so least squares and Bayesian with conjugate prior is used to estimate simultaneous equation model. The empirical results demonstrate there is a bidirectional causality relationship between tourism development and economic growth during 2001 to 2019 in Shangri-La which is supportive economy-driven tourism growth and tourism-led growth hypothesis, as well as a good economic environment to promote the growth of tourism and economic growth plays a greater role in promoting tourism development than tourism development does in promoting economic growth in Shangri-La. Through empirical analysis, this study puts forward countermeasures and suggestions for further promotion of Shangri-La tourism economy: government should attach importance to industrial relevance and maximize the impact of tourism one economic growth, increase the promotion and publicity, constantly expand the tourist market. At same time, improving the economic level of Shangri-La, optimize the industrial structure, and make tourism and economic growth promote each other, pay attention to the cooperation between Shangri-La and other tourism cities, and strengthen regional tourism cooperation. Finally, develop tourism revitalization planunderCOVID-19.