Abstract:
This study examines the impact of tourism-related factors on Sri Lanka’s economic growth
from 1988 to 2023 using a robust econometric approach. Leveraging descriptive statistics,
unit root tests, multiple linear regression, the Autoregressive Distributed Lag (ARDL)
bounds testing framework, and error correction modelling, the research captures both
shortrun and long-run dynamics between tourism and economic performance. Key indicators
namely tourism receipts, international tourist arrivals, tourism-related employment, and
average duration of stay are analysed against GDP per capita, while political stability,
macroeconomic stability, and trade openness are included as control variables. Findings
reveal a significant long-term linkage between tourism and economic growth in Sri Lanka,
affirming the tourism-led growth hypothesis within the country’s context. Short-run
causality tests further demonstrate that fluctuations in tourism metrics have immediate
impacts on national economic performance, underscoring the sector’s responsiveness and
potential as a rapid growth catalyst. The results highlight tourism’s strategic role in
enhancing foreign exchange earnings, generating employment, and fostering sustainable
development, even amid geopolitical disruptions and global crises. These insights offer
clear, data-driven guidance for policymakers and stakeholders in designing evidence-based
strategies to revitalize and sustainably develop Sri Lanka’s tourism sector. By providing a
nuanced analysis of tourism’s role in strengthening macroeconomic resilience, this study
contributes meaningfully to the tourism-economics literature while supporting Sri Lanka’s
ongoing journey toward inclusive and stable economic growth.
