This paper employs a dynamic time series econometrics framework, namely a vector error correction model (VECM), to investigate the link between foreign direct investment (FDI) and tourist arrivals in Mauritius for the period 1980-2015. The results confirm that FDI has been an important ingredient in the Mauritian tourism development in the long run. Analysis of the short run results shows that FDI continues to influence tourist arrivals but a relatively smaller impact is observed. Interestingly, a uni directional causality flowing from FDI to tourism development is validated while and a bi causal and reinforcing relationship was obtained between FDI and economic growth in the short run. Lastly, an indirect effect of FDI on tourism development in the short run via the economic growth channel was found.

Fauzel & Seetanah, Investigating the relationship between FDI and Tourism development for the case of Mauritius PP.pdf

Fauzel & Seetanah, Investigating the relationship between FDI and Tourism development for the case of Mauritius.pdf