THE NIGERIAN ECONOMY AND TOURISM LED GROWTH HYPOTHESIS: A TEST OF GRANGER CAUSALITY.

Abstract

The study analyzes the directional relationship of economic growth and tourism in Nigeria from 2000 to 2023, using the Granger Causality Test and the Autoregressive Distributed Lag Model (ARDL). Data used for the study were obtained from the World Bank Development Indicators and the United Nations World Tourism Organization Journals. The dependent variables of the study are Gross Domestic Product (GDP), which is the proxy for economic growth, and Tourism Receipts (TOUR), while the independent variables are investment (INV), inflation (INFL), exchange rate (EXCH), employment (EMP), tourist arrivals (TA), and human development index (HDI). This study adopts the human development index as an independent variable in two models developed in order to determine the impact of tourism on human development. The results of the Granger causality test show a unidirectional relationship of tourism to economic growth. The result of the ARDL shows that tourism hurts economic growth in the long run. The study recommended that the Government should create a policy that stabilizes the exchange rate, tackles employment challenges, and improves the quality of individuals employed in the tourism sector.