Examining the Tourism–Economic Growth Nexus in the United Arab Emirates: Evidence from Cointegration and Causality Analysis

This study investigated the tourism–economic growth nexus in the United Arab Emirates from 1995 to 2023 using VECM and ARDL models to capture long- and short-run dynamics. Structural breaks in 2008, 2015, and 2020, identified through Zivot–Andrews and Bai–Perron tests, account for major economic transitions associated with the global financial crisis, oil-market adjustment, and the COVID-19 shock. VECM results reveal three long-run cointegrating relationships among economic growth, real tourism receipts, gross capital formation, FDI, and oil rents, with heterogeneous adjustment toward equilibrium. ARDL results confirm a long-run relationship, with tourism receipts, gross capital formation, FDI, and oil rents positively associated with economic growth. Short-run results similarly indicate positive associations across these determinants. However, Granger causality results show that economic growth predicts real tourism receipts, while tourism receipts do not significantly predict economic growth, indicating a growth-led tourism perspective rather than tourism-led predictive causality. Structural-break interventions further demonstrate the importance of major economic shocks in shaping the tourism–growth relationship. The study contributes by integrating VECM, ARDL, Granger causality, and structural-break analysis within a resource-rich and rapidly diversifying Gulf economy. Overall, the findings highlight tourism, investment, FDI, and diversification as interconnected components of sustainable economic growth in the UAE.