ISSN: 2226-6348
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This study is to determine the relationship between economic growth, unemployment rate, exchange rate and tourist arrivals in Malaysia using secondary data from 1990 to 2019. The Augmented Dickey-Fuller test, Phillips-Perron test, Kwiatkowski-Phillips-Schmidt-Shin test, Johansen cointegration test and VECM Granger Causality test have been fully applied to achieve the objectives of the study. ADF and PP test were found of integrated of order 1, I (1) and for robustness purpose, KPSS results supports the unit root test well. Meanwhile, the Johansen-Juselius cointegration test indicates a long-run relationship were existing among the variables namely economic growth (GDP) as the dependent variable and unemployment rate, real effective exchange rate (REER) and tourist arrivals as the independent variables. The Granger Causality test is used to validate the association while also determining the direction of causation. The result showed the existence of a long-run relationship between the dependent variable economic growth (GDP) and its independent variables unemployment rate (UNEMP), real effective exchange rate (REER) and tourist arrivals (TA). It clearly shows the importance of each independent variable to the economic growth (GDP) of Malaysia. Meanwhile, there is a short-run unidirectional causal relationship found between GDP, UNEMP and TA. This article recommends that to reduce unemployment rate, increase exchange rate and increase number of tourist arrivals in order to have good economic growth.
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(Arumugam & Majid, 2023)
Arumugam, R., & Majid, M. Z. A. (2023). Understanding Economic Indicator toward Tourism Sector and Economic Growth in Malaysia. International Journal of Academic Research in Progressive Education and Development, 12(3), 2056-2074.
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