Analysis of the impact of tourism sector as a viable response to South Africa’s growth and development challenges

Abstract

Tourism is one of the top-three foreign revenue generating economic sectors globally, representing the total of 7% in the overal global exports. Overall weak economic and sectoral performance stresses the need for a strong alternative economic sector development so that to support traditional growth sectors which could potentially increase economic growth and development in South Africa. The aim of this study was to analyse the impact of the tourism sector on both economic growth and development in South Africa. There is a gap in literature on the extent and impact of tourism on economic development specifically. This study followes a quantitative research approach by investigating the relationship between tourism and economic growth in the period from 2005 to 2017, as well as tourism and economic development in the period from 1996 to 2016 in South Africa. These relationships were analysed by means of the Johansen cointegration and Vector Error Correction Models. The results indicate there is a long-run relationship between tourism and both economic growth and development. However, no short-run relationship can be validated between tourism and economic growth. A number of policy recommendations that could potentially contribute to the extension of the role of tourism in development include improved stability in the country and relaxation of current visa requirements.