Long-run contributions of tourism to economic growth: The case of Hawaii

An attempt is made in this chapter to determine the long-run relationship between tourism and economic growth and development of Hawaii. The debate on the "tourism-led growth" hypothesis has led to many empirical studies for countries and regions around the world. The proponents of tourism-led growth strongly assert that there is a positive correlation between the growth of tourism and the overall economic growth and development of a specific country or region. This study also supports the earlier findings elsewhere that tourism contributes to the long-run economic growth. Three specific variables of interest contributing to the GDP of Hawaii were considered in this study. They are agriculture, defense expenditure, and tourism. Using the Augmented Dicky-Fuller and Phillips Perron unit root test, we found that the variables included in themodel were non-stationary. The results indicate the presence of unit root, and therefore we used the Johansen technique of cointegration for our analysis. Based on this analysis, we conclude that tourism has contributed positively to the long-run growth of the economy of Hawaii.