Tourism and Economic Growth in Nigeria

Tourism and Economic Growth in Nigeria

CHAPTER ONE

Objectives of the Study.

The broad objective of this study is to evaluate and measure the economic effect and the relationship between tourism and economic growth in Nigeria. Other specific objectives are to determine;

How much capacity has tourism to tackle the general social economic problem in the economy such as low par capital income, poverty and general unemployment.
To measure how exchange rate fluctuations, affect tourism.
To analyze the effect of inflation on the economy and how it affects tourism participation.

CHAPTER TWO

LITERATURE

TOURISM DEVELOPMENT

Tourism is a product that is based upon simultaneous production and consumption. Before we look into tourism development, let us define the concept of tourism development. Tourism development refers to all the activities associated with providing facilities for tourists in a destination. It involves activities such as skills development, job and wealth creation, and marketing. Marketing of various tourist destinations through liaison, training and advice of local tourism businesses promotes tourism development. With the understanding of tourism development we can deduce the importance of tourism in developing countries and its economic impact on them.(Ateljevic & Page 2009.)

The tourist industry is growing at a respectable rate of 7.2% in Africa per year. This number has the potential to be much higher, but developing tourism requires an abundant amount of factors besides building a lovely lodge or having a wealth of beauty and wildlife on your doorstep. A successful tourism sector relies on good safety and security, health and hygiene, infrastructure, education and training. Developing tourism can help achieve some of these important goals. (Kolb 2006.)

Tourism development in developing countries is very vital in contribution to the economic growth of these countries. Countries which are classified as developing countries include nations in Asia, Africa and the Middle belt continent. Based on this report, Africa continent would be taken into consideration because of the natural resources that these countries have been blessed with.

As a matter of fact, tourism is developing at a faster rate globally and more countries are getting awareness about the need to develop tourism for economic advantages. According to the United Nation World Tourism Organization in 2006, tourism has grown in terms of destinations as there has been a widespread increase in the geographical expansion of tourism throughout the globe which has made it possible for many developing countries to develop tourism at their own pace for their economic advancement. However, it is a general phenomenon that tourism has a vital impact on the society, topography, environment and economic aspect of any country. In the social terms, the immediate benefit of tourism industry is the ability to bring people out of the unemployment circle. In other words, it creates job opportunity and also caters for both skilled and unskilled employment and it is known to be a labour-intensive industry which provides job per unit of investment compared to any other industry. The industry gives room to partnership and entrepreneurship within the tourism business concept thereby creating an innovation and bringing about economic activity (Morrison, Rimmington and Williams 1999, 230).

CHAPTER THREE

THE MODEL AND DATA DEFINITIONS

Model

Based on the available data and the previous research of Zortuk (2009) we specify the tourism growth model in Nigeria as follows:

InRGDP = B₀+ B₁InTOAR + B₂InRER + U

All the variables of the study are expressed in their natural logarithms to avoid the problem of heteroscedasticity; B’s are the parameters of the model to be estimated and relying on the literature it is expected that estimates of B₁ > 0 and B₂ > 0; GDP is real gross domestic product; TOAR is number of international tourist arrivals; ER is the real effective exchange rate and U is the error terms with the conventional statistical properties.

Data

The study uses annual data of the variables- Real Gross Domestic Product (GDP) which measures the overall economic growth of the country; International Tourist Arrivals (TOAR) as a measure of tourism development and Real Effective Exchange Rate (RER) as a measure of external competitiveness. The data on RGDP was obtained from Central Bank of Nigeria Statistical Bulletin 2013 while data on TOAR and RER were obtained online from World Development Indicators of the World Bank.

CHAPTER FOUR

EMPIRICAL RESULT AND DISCUSSIONS

Due to the stochastic trend process associated with most time series data, it is important that these series are tested for the presence of unit root. The result of the unit root stationarity test in tables 2a and 2b were conducted using Augmented Dickey Fuller (ADF) and Phillip Perron (PP). The result of the ADF test shows that all the variables except economic growth were not stationary at level while the PP test suggested the presence of a unit root for the variables at level. Therefore entire series were subjected to further test at first differencing. It is evidence that all the variables achieved a stationary trend process after the first differencing for both the ADF and PP tests. Hence the null hypothesis of unit root could no longer be accepted for the variables at this level. This means that the series could be regarded to be integrated to order 1 process.

CHAPTER FIVE

CONCLUSION AND RECOMMENDATION

This study examined the dynamic relationship between tourism and economic growth in Nigeria for the period 1996 to 2016. Adopting the concepts and methods of the cointegration and Granger causality test, the study investigated the short-term dynamic relations and longrun equilibrium conditions. Similar to the findings of Zortuk (2009) using data for Turkey, Kreishan (2010) using data for Jordan and Mishra et.al (2011) using data for India, a unilateral causality and positive significant long-run equilibrium relationship exist in Nigeria. The significant impact of tourism on Nigerian economy justifies the necessity of public intervention; the paper therefore recommends provision of adequate security for both domestic and foreign tourists, tax incentives to hotels and tourism related industries and investment in basic infrastructure such as roads, better air ports facilities and good transport system. These will go a long way to ensure stable tourism demand for the country.

REFERENCES

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