Tourism and Economic Growth: Comparing Malaysia and Singapore

The nexus between tourism and economic growth has been debated whether tourism contributes to the growth of economies (tourismled economic growth) or it is impacted by growth of the economies (economic-driven tourism growth). This paper examines the impact of tourism on economic growth of Malaysia and Singapore. Two control variables, international trade and exchange rate are included in the model to enhance the specification. The results suggest that economic-driven tourism growth hypothesis is supported in Malaysia while tourism-led economic growth hypothesis has been identified for Singapore. Moreover, maintaining a competitive exchange rate is vital to improve the tourism and economic growth.