The study examines the link between tourism development and economic growth in Macao, leveraging its status as a global tourism and gaming hub. Using a data decomposition strategy and Limited Information Maximum Likelihood (LIML) econometric approach, it analyzes both short- and long-term relationships based on data from 1995 to 2019 and 2002–2019. Findings confirm tourism development as a key driver of Macao’s economic growth, with positive impacts on economic development in both the short and long term. Physical capital, labor force, and human capital also contribute positively in the long term, while only physical capital shows short-run effects. The study underscores tourism as a primary growth engine and recommends policies focused on diversification, technological integration, and sustainability to strengthen the tourism-economy nexus and ensure long-term development.