Economic Change and Restructuring

, Volume 51, Issue 1, pp 49–68 | Cite as

Effect of tourism on economic growth of Sri Lanka: accounting for capital per worker, exchange rate and structural breaks

  • Peter Josef Stauvermann
  • Ronald Ravinesh KumarEmail author
  • Syed Jawad Hussain Shahzad
  • Nikeel N. Kumar


We explore the nexus between tourism, exchange rate and economic growth in Sri Lanka over the period 1980–2014. Using the augmented Solow (Q J Econ 70(1):65–94, 1956) framework and the ARDL bounds procedure whilst accounting for structural breaks using Bai and Perron (J Appl Econ 18(1):1–22, 2003) multiple break tests, the short-run and long-run association and impacts are examined. The results confirm the presence of a long-run association between tourism receipts (% of GDP), exchange rate, capital per worker and output per worker. The regression results show a 1% increase in tourism receipts results in a 0.03 and 0.06% increase in output per worker in the short-run and long-run, respectively. A unidirectional causality is noted from tourism to output per worker; from exchange rate to output per worker and capital per worker; and from output to capital, in per worker terms. Finally, we note that although structural breaks periods have negative association with economic growth, they are not statistically significant.


Tourism Economic growth Elasticity Cointegration Causality Structural breaks Sri Lanka 



Peter J. Stauvermann thankfully acknowledges the financial support from the research funds of the Changwon National University 2015–2016. All the authors are grateful to the editor and the anonymous reviewers for their comments and advice. The usual disclaimer applies.


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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  • Peter Josef Stauvermann
    • 1
  • Ronald Ravinesh Kumar
    • 2
    • 3
    • 4
    Email author
  • Syed Jawad Hussain Shahzad
    • 5
  • Nikeel N. Kumar
    • 6
  1. 1.Department of Global Business and EconomicsChangwon National UniversityChangwonRepublic of Korea
  2. 2.School of Accounting and FinanceThe University of the South PacificSuvaFiji
  3. 3.Bolton Business SchoolUniversity of BoltonBoltonUK
  4. 4.Leicester School of ManagementUniversity of LeicesterLeicesterUK
  5. 5.COMSATS Institute of Information TechnologyIslamabadPakistan
  6. 6.School of EconomicsThe University of FijiLautokaFiji

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