Microsoft Word 2007 ichrie conference Proceedings Final-Final 06-06-07. doc

DISCUSSIONS 
This study examines the causal relationship among tourism development, economic activity, exchange rates 
and exports in China, Singapore, Korea and Taiwan based on a multivariate analysis of Granger causality test, while 
incorporating the mega events related to the tourism industry in those four Asian tourist destinations into the 
investigation. The main goal of this study, as mentioned in the introduction section, concentrates on the causality 
between tourism development and the other three factors. Results of the causality test from four tourist destinations 
are summarized in Table 1. The major findings, which both support and contradict empirical findings in the 
literature, are discussed as follows. First of all, while there is no long-run link between quarterly tourism receipts 
and economic growth in Korea (Oh, 2005), we detect an equilibrium relationship among monthly tourism 
development, economic activity, exchange rates and exports in Korea. Causality test results in this study are similar 
with the findings in Oh (2005) and Kim et al. (2006). That is, there is an economy-led tourism growth rather than a 
tourism-led economic growth in Korea, and a reciprocal link between tourism expansion and economic growth in 
Taiwan. Empirical results also indicate that tourism development leads to economic growth, but economic growth 
cannot cause tourism expansion in Singapore. Moreover, there is no casual relationship between the two factors in 
China. 
Kim et al. (2006) asserted that the mixed results regarding the existence of the tourism-led economic 
growth in Taiwan but not in Korea could be attributed to 1) the level of openness and travel restriction and 2) the 
size of a national economy in the destination countries. Empirical result based on this study that the tourism 
development can promote economic growth in Singapore but not in China seems to support their explanations. First 
of all, Zhang, Pine and Lam (2005) indicated that tourism was not regarded as a business or industry after the 
People’s Republic was established in 1949. Instead, tourism served for the purpose of the special political activities 
and was considered as a part of the foreign affairs of the country. It was not until 1978 that tourism was regarded as 
an economic activity that can contribute to the national economy through foreign exchange earnings. On the 
contrary, the technological improvements in transportations and communication after 1965 provoked tourism in 
Singapore (Teo, 1994). In Singapore, tourism was welcomed and viewed as a means to create much-needed 
employment in a newly-independent nation (Chang & Yeoh, 1999; Yeoh, Ser, Wang & Wong, 2002). Toh and Low 
(1999) stated that the establishment of the Singapore Tourist Promotion Board in 1964 shows that the government 
recognizes the significance of the tourism industry to Singapore’s economic and planning agenda. Therefore, as Kim 
et al. (2006) claimed, the country like Singapore with a more open society is more likely to promote tourism and 
enhance economic growth.

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