Exploring the Tourism and Economic Growth Relationship in Vietnam: A Cointegration Analysis with Model-Specific Structural Breaks

In this study, we present a comprehensive analysis to examine the resilience of tourism in Vietnam since the Doi Moi period. Using an augmented Solow framework, data from 1986 to 2020, and the ARDL approach, we estimate the long-run and short-run effects, whilst accounting for model-specific structural breaks. To provide stronger validation and robustness of the results, we estimate eight models under four cases. We start with the base model, which includes tourism and capital (in per worker terms), and then augment it with factors that are carefully identified from the literature. The additional factors include urbanisation, financial development, trade openness, foreign direct investment (FDI), information and communication technology (ICT), and natural resources. We find that capital accumulation and tourism (in per worker terms) remain positive drivers of growth in all the estimations. Results from alternative models also highlight the pro-growth effects of urbanisation, financial development, and trade openness. A positive association between carbon emissions and economic growth is also noted, indicating the existing production–consumption setup, the pace of environmental harvesting, and the weak decoupling effects that could lead to negative externality in the long run. Factors like technology, natural resource rents, and FDI show negative effects on growth as well. Moreover, by examining the causality dynamics, the study further contributes to broader policy discussion. Hence, policies targeted to promote the growth process, and the advancement of the economy, should continue supporting capital accumulation, tourism development, urbanisation, financial development, and international trade. However, future economic policies should cautiously address emissions, natural resource use, and re-evaluate the gains from foreign direct investment (FDI) to ensure growth remains sustainable. With tourism and capital accumulation at the core of this study, the findings of this study are intended to generate deeper policy discussions on resource allocations and the need to harness and/or rely on contemporary sources of growth to promote the sustainable development of Vietnam.