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Implications of Paradigm Shift in Tourism Policy : An Evidence of Bhutan


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1 Department of Commerce, MIT Campus, Manipal Academy of Higher Education, Manipal - 576 104, Karnataka, India
     

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The study intended to examine the impact of major changes in the tourism policy of Bhutan adopted in 2005 as a ‘Sustainable Tourism Development Policy.’ A genuine effort was made to investigate the possible presence of a long-run relationship between tourism and economic growth using the Johansen method of cointegration and vector error correction mechanism. The international tourists' arrival and GDP per capita were used as proxies for tourism expansion and economic growth, respectively. The findings confirmed that tourism has expanded significantly after Bhutan’s policy shift from a more restrictive regime to a more pragmatic ‘Sustainable Tourism Development Policy.’ We obtained concrete evidence of a long-run relationship between tourism expansion and economic growth. However, in the short-run, there was no such strong evidence. The move from a restrictive tourism regime to a more open tourism regime is found to be economically beneficial for a small land-locked economy and provides better economic and social integration with the neighboring countries over a long-run period. The study is a novel attempt to apply time series cointegration and vector error correction method for examining the impact of tourism policy change on Bhutan’s economic growth.

Keywords

Tourism, Economic Growth, Cointegration, VECM Model, Sustainability.

JEL Classification Codes : C49, L83, O47, Q01.

Paper Submission Date : April 5, 2020; Paper Sent Back for Revision : September 10, 2020; Paper Acceptance Date : October 15, 2020.

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  • Implications of Paradigm Shift in Tourism Policy : An Evidence of Bhutan

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Authors

Bidyut Ghosh
Department of Commerce, MIT Campus, Manipal Academy of Higher Education, Manipal - 576 104, Karnataka, India
Suman Chakraborty
Department of Commerce, MIT Campus, Manipal Academy of Higher Education, Manipal - 576 104, Karnataka, India

Abstract


The study intended to examine the impact of major changes in the tourism policy of Bhutan adopted in 2005 as a ‘Sustainable Tourism Development Policy.’ A genuine effort was made to investigate the possible presence of a long-run relationship between tourism and economic growth using the Johansen method of cointegration and vector error correction mechanism. The international tourists' arrival and GDP per capita were used as proxies for tourism expansion and economic growth, respectively. The findings confirmed that tourism has expanded significantly after Bhutan’s policy shift from a more restrictive regime to a more pragmatic ‘Sustainable Tourism Development Policy.’ We obtained concrete evidence of a long-run relationship between tourism expansion and economic growth. However, in the short-run, there was no such strong evidence. The move from a restrictive tourism regime to a more open tourism regime is found to be economically beneficial for a small land-locked economy and provides better economic and social integration with the neighboring countries over a long-run period. The study is a novel attempt to apply time series cointegration and vector error correction method for examining the impact of tourism policy change on Bhutan’s economic growth.

Keywords


Tourism, Economic Growth, Cointegration, VECM Model, Sustainability.

JEL Classification Codes : C49, L83, O47, Q01.

Paper Submission Date : April 5, 2020; Paper Sent Back for Revision : September 10, 2020; Paper Acceptance Date : October 15, 2020.


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DOI: https://doi.org/10.17010/pijom%2F2020%2Fv13i12%2F156587