Tourism and Trade in Malaysia: Evidence from Malaysia’s Trading Partners

Habibi, Fateh

doi:10.22059/ier.2024.283717.1006669

Tourism and Trade in Malaysia: Evidence from Malaysia’s Trading Partners

Document Type : Research Paper

Author

Fateh Habibi

Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran.

10.22059/ier.2024.283717.1006669

Abstract

As an important economic sector, the international tourism industry has many social, cultural, and economic impacts on the destination country's economy. In Malaysia, tourism is recognised as a key driver of economic growth. Trade openness, in turn, can act as an important catalyst for the expansion of the tourism industry. This study investigates causal relationships between tourism and trade openness using aggregated variables—total international tourist arrivals to Malaysia and trade (merchandise and services)—for Malaysia’s five largest trading partners: China, the United States, Japan, Singapore, and Thailand. The results show bidirectional causality between international tourist arrivals in Malaysia and openness to both merchandise and services trade. Overall, the findings indicate that further trade liberalisation with Malaysia’s major trading partners can promote growth and development in the tourism sector, particularly in the cases of Malaysia–Singapore and Malaysia–Thailand trade relations.

Keywords

Granger causality

Malaysia

openness

tourism

trade components.

Subjects

Tourism Economics

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