TOURISM AND ECONOMIC GROWTH OF SRILANKA

Tourism and Economic Growth of Srilanka

Acknowledgement

Writing this thesis has been very demanding, challenging and time-consuming, but also remarkable, informative and above all fun. Nevertheless, it feels great to have finally completed my bachelor's or master's thesis and I am now looking forward to a nice relaxing period for recovering. It has been both advantages and drawbacks with the limited amount of earlier research conducted within this area, even though I faced serious troubles but sometimes the advantages of this research luckily were in my favor and have made this research both challenging and interesting.

I would like to thank my supervisor -------, professor at -------University, who has been great in guiding my through this thesis, helping me through the difficulties I faced during the entire process and motivated me to work hard. Furthermore, I would like to thank all my friends, for their contributions by sharing their perceptions and opinions with me. Above all I would like to thank my family and teachers that provided me with valuable and constructive criticism.

Abstract

Although there are arguments that development in the tourism industry leads to economic development, very few studies empirically addressed this issue. This paper investigates the issue from a developing country perspective: Sri Lanka. We use annual data from 1960 to 2000 to model the causal relationship between tourism and economic growth using multivariate cointegration, error-correction modelling and variance decomposition analysis. The results of the study suggest that there is a significant causal relationship from tourism receipts to the Gross Domestic Product (GDP) of Sri Lanka. It can be argued that economic policies should be directed to improving the tourism industry to produce a higher economic growth rate.

Table of Contents

CHAPTER ONE: INTRODUCTION4

Background4

Aims and Objectives of the Paper5

Tourism and Economic Development6

Economic Condition of Sri Lanka13

CHAPTER TWO: LITERATURE REVIEW17

Protected areas in Sri Lanka17

Exploring determinants of the “investment climate”27

The importance of non-farm enterprises for rural development32

Specific challenges in the Sri Lankan context34

CHAPTER THREE: METHODOLOGY37

Tourism impacts in Yala38

CHAPTER FOUR: DISCUSSION AND ANALYSIS50

CHAPTER FIVE: CONCLUSION75

REFERENCES80

Chapter One: Introduction

 

Background

Sri Lanka went into the worldwide tourism market in the 1960s. Since then, government undertaking has been a key element in tourism development in Sri Lanka. The Ceylon Tourist Board was established in 1966 in alignment to deliver principle heading and agency to this undertaking part of the growing economy. The tourism part has been instrumental in deducing foreign exchange, paid work possibilities and home returns for Sri Lankans, as it has in several other growing economies. Therefore, the development of the tourism part looks like to have been as noteworthy as the development of other elements of the money of Sri Lanka. There were some set-backs right through last two population of decades in the tourism development process.1 However, the Sri Lankan tourism part has been advancing significantly, helping amazingly to GDP. For demonstration, worldwide tourist appearances to Sri Lanka augmented from 18,969 in 1966 to 400,414 in 2000 (see Appendix). International tourism acknowledgements additionally augmented from US$ ...