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The IUP Journal of Business Strategy
Tourism Expansion, Urbanization and Economic Growth in India: An Empirical Analysis
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The present study empirically investigates the causal nexus between tourism expansion, urbanization and economic growth in India using Granger causality test over the period from 1995 to 2014. The empirical results revealed that tourism expansion and economic growth are independent of each other in the short run and does not validate either tourism-led growth hypothesis or growth-led tourism hypothesis. Besides, the test results show that one-way Granger causality runs from economic growth to urbanization and urbanization to tourism expansion in India. The study suggests that urbanization and tourism expansion cannot be sustained if economic growth momentum is not enhanced in an effective manner. By implementing vigorous economic growth strategies in India, the scope for urbanization and tourism can be further widened.

 
 
 

Over the decades, tourism as an industry has experienced continuous growth and deepening diversification to become one of the fastest growing economic sectors in the world. Tourism has become an important sector that has an impact on development of national economy. It is also observed that foreign tourism has a positive effect on the long-run economic growth through different channels. First, tourism is a significant foreign exchange earner which allows for payment of imported capital goods or the basic inputs used in the production process. Second, tourism plays an important role in stimulating investment in new infrastructure and competition between local firms and firms in other tourist countries. Third, tourism encourages other economic industries by direct, indirect and induced effects. Fourth, tourism helps generate employment and increases income. Fifth, tourism can cause positive exploitation of economies of scale in national firms (Fagance, 1999; Lin and Liu, 2000; Andriotis, 2002; and Schubert et al., 2011). Finally, tourism is an important factor in the diffusion of technical knowledge, stimulation of research and development and the accumulation of human capital.

 
 
 

Business Strategy, Swachh Bharat Mission (SBM), Atal Mission for Rejuvenation and Urban Transformation (AMRUT), National Heritage City Development and Augmentation Yojana (HRIDAY), Tourism Expansion, Urbanization, Economic Growth, India, An Empirical Analysis.