Effect of tourism on economic growth of Sri Lanka: accounting for capital per worker, exchange rate and structural breaks Peter Josef Stauvermann 1 • Ronald Ravinesh Kumar 2,3,4 • Syed Jawad Hussain Shahzad 5 • Nikeel N. Kumar 6 Received: 26 April 2016 Ó Springer Science+Business Media New York 2016 Abstract We explore the nexus between tourism, exchange rate and economic growth in Sri Lanka over the period 1980–2014. Using the augmented Solow (Q J Econ 70(1):65–94, 1956) framework and the ARDL bounds procedure whilst accounting for structural breaks using Bai and Perron (J Appl Econ 18(1):1–22, 2003) multiple break tests, the short-run and long-run association and impacts are examined. The results confirm the presence of a long-run association between tourism receipts (% of GDP), exchange rate, capital per worker and output per worker. The regression results show a 1% increase in tourism receipts results in a 0.03 and 0.06% increase in output per worker in the short-run and long-run, respectively. A unidirectional causality is noted from tourism to output per worker; & Ronald Ravinesh Kumar kumar_RN@usp.ac.fj; rrk1mpo@bolton.ac.uk; rrk8@student.le.ac.uk Peter Josef Stauvermann pstauvermann@t-online.de; pjsta@changwon.ac.kr Syed Jawad Hussain Shahzad jawad.kazmi5@gmail.com; jawadhussain@vcomsats.edu.pk Nikeel N. Kumar nikeelk@unifiji.ac.fj 1 Department of Global Business and Economics, Changwon National University, Gyeongnam, 9, Sarim Dong, 641-773 Changwon, Republic of Korea 2 School of Accounting and Finance, The University of the South Pacific, Laucala Campus, Laucala Bay Road, Suva Private Bag, Suva, Fiji 3 Bolton Business School, University of Bolton, Deane Rd, Bolton BL3 5AB, UK 4 Leicester School of Management, University of Leicester, Leicester LE1 7RH, UK 5 COMSATS Institute of Information Technology, Islamabad, Pakistan 6 School of Economics, The University of Fiji, Lautoka, Fiji 123 Econ Change Restruct DOI 10.1007/s10644-016-9198-6