A groundbreaking new study has emerged from the heart of Southeast Asia, shedding critical light on the intricate dynamics between tourism and economic development across the 11 ASEAN member states. This research breaks fresh ground by methodically investigating the long-debated hypotheses about whether tourism acts as a catalyst for economic growth—termed the tourism-led growth (TLG) hypothesis—or whether economic growth in turn fuels tourism expansion, known as the economy-driven tourism growth (EDTG) hypothesis. The scope and depth of this study mark a significant advance over prior research, employing a sophisticated two-stage empirical framework that not only tests causality but also maps the latent, multidimensional relationships underpinning these economic phenomena.
At the core of the study is a rigorous analytical design that first leverages Granger causality tests alongside Autoregressive Distributed Lag (ARDL) models. This initial stage is crucial for discerning the direction and nature of the relationship between tourism flows and GDP within the ASEAN region. By employing these econometric techniques, the authors avoid common pitfalls of correlation-based analyses, instead establishing temporal precedence and potential causal linkages. This methodological foundation enables a robust diagnosis of whether tourism serves as an economic engine or merely rides the tide of broader economic development.
The second stage of analysis incorporates Structural Equation Modeling (SEM), a powerful statistical approach rarely applied to this domain in Southeast Asia until now. SEM allows the researchers to capture latent variables that represent unobserved constructs influencing both tourism and economic growth. Doing so enriches the understanding far beyond traditional regression outputs, revealing nuanced multidimensional interactions that better reflect the economic ecosystems of these diverse countries. It is through this dual-layered approach that the study lays bare the complex reciprocal relationships and feedback mechanisms often oversimplified in earlier works.
One of the study’s standout contributions is its differentiated modeling strategy based on country-level economic categorization. Instead of applying a one-size-fits-all model, the research stratifies ASEAN countries by GDP size and developmental status, resulting in two distinct analytical frameworks. The first encompasses all ASEAN states, revealing a stronger prevalence of the EDTG hypothesis—where economic growth fuels tourism demand. Conversely, focusing on the larger economies such as Indonesia, Thailand, and Malaysia uncovers stronger empirical support for tourism-led growth. This bifurcation underscores how economic size and maturity critically shape the interplay between tourism and growth, highlighting the necessity of context-sensitive policymaking.
Policy implications flowing from this stratified insight are profound. For larger ASEAN economies that exhibit a tourism dependence potentially fraught with vulnerabilities, the study advises caution. It warns that over-reliance on tourism revenues may introduce economic fragility, especially under global shocks like pandemics or geopolitical uncertainties that can rapidly diminish international travel flows. In contrast, for less-developed countries within ASEAN, strategic investments in tourism infrastructure and marketing could serve as powerful economic growth accelerators. By stimulating tourism demand in these emerging economies, policymakers have a lever to diversify income streams and generate employment opportunities, fostering a more inclusive regional uplift.
Methodologically, the study sets a new benchmark by integrating ARDL-based Granger causality with SEM in a complementary fashion, addressing limitations seen in earlier single-method approaches. This multidimensional analytical fusion allows the capture of both direct and indirect effects in the tourism-growth nexus. It also facilitates a more nuanced appreciation of bidirectional causality, recognizing that economies and tourism sectors do not function in isolation but co-evolve through complex feedback loops. This innovative framework not only enhances empirical robustness but also offers a scalable template for future investigations in other regional contexts.
Despite its strengths, the research transparently acknowledges certain limitations. Its focus on ASEAN countries may constrain the generalizability of findings to other regions with differing socio-economic structures or tourism profiles. Furthermore, vital variables such as tourism resource endowment, environmental sustainability, investment climate, and population demographic characteristics are not incorporated into the models. These factors potentially modulate the tourism-growth relationship and merit inclusion in subsequent research. The reliance on annual data for causality testing is another identified constraint, as it may mask seasonal or higher frequency variations crucial for more precise inference.
Another critical consideration is the exclusive focus on international tourism data due to inconsistent availability of domestic tourism statistics across ASEAN countries. This omission could underrepresent the full economic significance of tourism, particularly for countries like Indonesia and Vietnam, where internal travel plays a major role. The study’s findings hence may tilt more heavily toward countries with substantial international inbound tourism, skewing regional comparisons. To capture a holistic picture, future research must endeavor to integrate domestic tourism metrics, enriching policy relevance and economic accuracy.
The study’s exclusion of nonlinear dynamics and omission of environmental and social impact variables also mark opportunities for further exploration. As sustainable tourism increasingly gains traction as both a developmental and environmental priority, understanding how tourism growth interacts with ecological constraints and community well-being emerges as an urgent research frontier. Extending the analytical toolkit to incorporate these dimensions could illuminate pathways for ASEAN countries to balance economic aspirations with sustainability imperatives, an imperative echoed globally.
Delving deeper into individual country experiences through case studies is another fertile avenue underscored by the authors. Disaggregating the broad regional findings to uncover country-specific mechanisms, institutional frameworks, and market conditions would enrich theory and policy. Such micro-level analyses could elucidate how local cultural, geographic, and governance factors shape tourism-growth dynamics, potentially revealing best practices or cautionary tales that regional averages obscure. This enhanced granularity would empower ASEAN policymakers with tailored strategies rather than generic prescriptions.
Beyond empirical and policy dimensions, this research advances the theoretical discourse on the tourism-economic growth interface. By empirically disentangling the directionality of influence and incorporating latent construct modeling, it challenges simplistic linear narratives, advocating for a more complex systems perspective. This conceptual shift has implications for how economists, planners, and the tourism industry conceive of growth strategies, emphasizing interplay, feedback, and differentiation rather than unidirectional causation.
The findings resonate especially in the current post-pandemic economic context, where the tourism sector worldwide has faced unprecedented downturns and uncertainties. Understanding how tourism and economic growth interrelate in Southeast Asia, a region heavily reliant on tourism as a development tool, carries immediate relevance. The study’s insights provide a roadmap for recovery strategies that are informed by empirical evidence rather than anecdote, suggesting pathways to build resilience and promote sustainable growth amid shocks.
Importantly, the study highlights the need for investment in tourism infrastructure as a development catalyst in lower-income ASEAN nations, a message that dovetails with increasing global focus on infrastructure finance and regional integration. Building quality transport, hospitality, and service amenities not only attracts tourists but also generates multiplier effects across local economies—a dynamic aptly captured by the tourism-led growth evidence in these emerging countries.
Conversely, the demonstrated risk of overdependence on tourism in wealthier ASEAN states like Thailand calls for economic diversification to mitigate shocks. Policymakers must weigh the gains of tourism against the potential costs of exposure. This calls for a balanced, multi-sectoral economic development approach that leverages tourism while fortifying other industries, ensuring long-term stability and sustainable wealth creation.
In sum, this pioneering study carved a novel path into the intertwined futures of tourism and economic performance within ASEAN, blending advanced methodologies and differentiated modeling to reveal a tapestry of relationships shaped by country size, development status, and policy context. Its insights offer timely guidance for governments, investors, and planners seeking to harness tourism’s benefits responsibly amid rapid global changes. As such, it sets a new empirical and conceptual standard for scholarship and strategy in the nexus of tourism and economic growth.
The integration of Granger causality, ARDL modeling, and SEM creates a comprehensive analytical toolkit that future studies globally would do well to emulate. By illuminating the conditional nature of tourism-growth causality and exposing latent variable interactions, this research deepens our collective understanding of how destinations develop economically through travel—a subject of growing importance as the world reimagines post-pandemic recovery and sustainable prosperity.
This landmark study’s implications transcend ASEAN, inviting comparable investigations in other regions and prompting a reexamination of dominant growth paradigms. More than a mere academic exercise, it beckons policymakers and industry leaders to rethink tourism’s role not just as a sector, but as a multifaceted engine embedded within broader economic systems. The path to sustainable, inclusive growth in tomorrow’s interconnected world may well depend on such holistic, data-driven insights.
Subject of Research: The relationship between tourism and economic growth in ASEAN countries, specifically testing tourism-led growth (TLG) and economy-driven tourism growth (EDTG) hypotheses.
Article Title: Tourism-led growth or economy-driven tourism growth in Southeast Asian countries
Article References:
Fan, F., Ha, VT. Tourism-led growth or economy-driven tourism growth in Southeast Asian countries.
Humanit Soc Sci Commun 12, 1374 (2025). https://doi.org/10.1057/s41599-025-05594-1
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