Abstract

Tourism plays a crucial role in supporting Nepal’s Gross Domestic Product (GDP) and employment generation. This paper examines the impact of Tourism Development, measured through Inbound Tourism Receipts, on Nepal’s Economic Growth. Using the Solow Growth Model as a theoretical foundation, this study empirically assesses the relationship between tourism development and economic growth in Nepal using time series data from 1974-2023. The growth rate of Real GDP is taken as the dependent variable while Tourist Income Receipts from inbound tourists is the key explanatory variable in the analysis. The results demonstrate a positive association between the variables throughout all seven models, with the relationship being significant at the significance level of 10% in the Dynamic Model. Since the value of the previous period Real GDP growth is included in the Dynamic Model, the findings suggest that the economic state of the previous period might be influencing the relationship between Tourist Income Receipts and Economic Growth in Nepal. Hence, if policies are aligned with the underlying economic conditions, the country might be able to reap the benefits of tourism development.

Advisor

Krause, Brooke

Department

Economics

Disciplines

Economics | Growth and Development | Social and Behavioral Sciences

Publication Date

2025

Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis

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