Study on the Dynamic Relationship between Tourism Expansion and Economic Growth in China(1978～2008): Based on the Cointegration Test and Granger Causality Test Model

There is a certain long-term interaction between economic growth and development,which has already been noted by scholars and officers in the world.However,the mutual relationship between economic growth and development is still a controversial subject because of the regional economic difference.Globally,there is no consensus on whether economic growth promotes development or development drives the growth of economy.Therefore,the research on the dynamic relationship between development and economic growth can not only provides the important reference for government's economic policy making,but also reflects the benefits of tourism promotion strategy. As industry is becoming stronger,China's economy is on the way to sustained growth for about 30 years.Intuitive judgment is that industry seems to be one of the important factors to China's economic growth.Nevertheless,whether these two facts are related needs empirical examinations.As an emerging market and famous destination in the world,China's example of the relationship between and economy will provide valuable information to other countries in the world with regard to the decision making on and economic development. This paper examines the long-term equilibrium and causal effect relationship between expansion and economic growth or tertiary industry in China.Secondary data on tourism,whole economy and tertiary industry from the China Statistics Yearbook from 1978 to 2008 are used in this study.The Engel-Granger Two-step Co-integration Model and Granger Causality Model are employed as the theoretical foundation. The results indicate that:(1) There is a long-term stable co-integration between expansion,economic growth,and tertiary industry in China.Tourism development contributed to the economic growth and the tertiary industry development,while different with western studies,the relationships in reverse directions don't exist.(2) The elasticity coefficient from China's economic growth and the third industry growth to development are 2.158 and 2.340 respectively,among which the third industry has greater influence on development.Findings of this study provide important implications to policy makers on coordinating development between economy and tourism.