economic theory of tourism
T. (2002). Developed time-series techniques are used, namely Augmented Dickey-Fuller (ADF) for unit root, Johanson and Juselius (JJ) for cointegration, and Granger causality test for causal relationships. Bangladesh is the largest tourist generating market for India in which the India-Bangladesh relation is a key factor for this foreign tourist arrivals(FTAs) and tourism development. studying the economics of tourism geography, ways that re‘ect the cultural turn in the ‘new’ economic geography, and the increasing signi”cance of networks and new information and communication technologies (ICTs). Tourism plays a significant part in Australia’s economy, contributing to both GDP and employment. For instance, suppose if tourism development affects growth mainly. (2007). Economic and Social Benefits from Tourism. economic growth. economic growth work through the standard income determinants instead? form regression approach is widely used in econometrics (e.g., Nordhaus, 2006; Horowitz, 2009; Ng and Zhao, 2011, and the references therein) and is complementary to the structural approach. Fully revised and updated, The Economics of Tourism Destinations, Second Edition provides a succinct guide to the economic aspects of tourism for students and practitioners alike to decipher the methods of … The growth of ethical tourism has been a key recent feature + volunteerism; Export earnings: tourism is a service industry - generates important foreign exchange earnings. The major, disadvantages are that it requires more data and is sensitive to model, opposite is true of the reduced form approach. (2012). Koenker, R. & Bassett, G. (1978). View or download all content the institution has subscribed to. Intuitively, tourism activity, should be more significant for economies that depend heavily on international tourism. Tourism Satellite Account), supply trends, competition models, macro evaluation of tourism projects and events and the role of tourism in a development strategy. If you have access to a journal via a society or association membership, please browse to your society journal, select an article to view, and follow the instructions in this box. However, our findings suggest a redirection of the, goals of tourism development from one of investing in tourism for its own sake to one where, tourism investments are made to strategically support standard income determinants, such as, promoting capital accumulation. Moreover, our analysis also indicates that this industry has a major impact on long-term economic growth in the region as well. Ordinary least-squares regression results, Panel C: Alternative model specification and measures, Empirical results from the cross-sectional regression, test statistics. If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. We use a trivariate model of real gross domestic product (GDP), international tourist expenditure and a real effective exchange rate, to calculate a tourism multiplier in order to assess the contribution of tourism to the economic growth. Tourism Demand, Economic Theory And Econometrics: An Integrated Approach. At the same time, the unidirectional results of VECM models have confirmed the existence of economic growth in the short term. such as timber and mining (Hall & Lew, 2009). cointegration, autoregressive distributed lag model and rolling windows bounds testing approach to check the stability of the model. Taking the top nine urban tourism destinations in China as the objects of the study, we compare how government investments in tourism resource, environmental protection, economy and infrastructure impact tourism growth through four scenarios. This question is important because the answer will lead to dramatically different policy, implications. Hence, the least-squares regression coefficie, Figure 2 Quantile regression coefficients plot for the, Each panel shows the estimated regression quantile coefficient for each o, log(EDU), log(RND) and log(CAP/POP)) on the dependent variab, . However, they have not managed to indicate the roles that the tourism industry plays in Dubai. The results indicate positive and negative experiences, but both are seen as especially important in the formulation of strategies for tourism development in the future. each other in the short run, in the long run, it is economic growth that drives the development of the tourism sector in Tanzania. This study investigates causal relationships among tourism, energy consumption, economic growth, and CO2 emissions for the 10 highest ranked countries in terms of tourist arrivals in the world for the period 1995-2014 using the panel VAR model. The grey band a, .9 quantiles. Next, we investigate the economic mechanism underlying the positive tourism-growth, the association by including the standard income determinants. (2003) argued that the combination of international tourism. (1998). Access scientific knowledge from anywhere. Our parameter, estimate suggests that a 1% increase in TOUR (i.e., international arrivals) can lead to an, estimated average of 0.562% increase in GDP per capital. Hence, the ELG strategy is still the best option for most developing Asian countries. indicate a long-run equilibrium relationship and a further uni-directional This study contributes to propose an approach which effectively assesses performance of medical tourism industry based on considering the economic impact factors as well as provides a conceptual framework for the industry analysis. Waitt, G. (2001). Table 1 presents our summary statistics for the. Other notable mentions, such as the Expo 2020 Dubai and the Sheik Muhammed Vision 2020 awards are also discussed. As agrarian systems decline, tourism may also offer rural dwellers an alternative to unemployment or migration to urban areas. By continuing to browse Quantile, regression, on the other hand, is best for identifying these potential differential impacts (Koenker, In terms of economic intuition, quantile regression can capture the heterogeneity across, countries in terms of their growth experience. Sharing links are not available for this article. reasons, in some countries, tourism is an important source of employment for poor people. Sign in here to access free tools such as favourites and alerts, or to access personal subscriptions, If you have access to journal content via a university, library or employer, sign in here, Research off-campus without worrying about access issues. Is export-led growth passé? This finding again suggests that tourism development affects economic growth, Figure 1 Quantile regression coefficients plot for the, The lower panel shows the estimated regression quantile coe, Moving from the left to the right in the panel, the vertical distances of t, magnitudes of the regression quantile coefficient for the, the dot-dash line is the 95% confidence band for the quantile regression coe, value is considered statistically significantly different fro, regression coefficient while the dotted-lines around it s, coefficient. Tourism has undoubtedly become one of the most important economic activities in Pacific island countries (PICs). As a result, there is a growing body of academic literature on the empirical. This policy implication is consistent with studies that find. The theoretical goal is to better understand how different subsystems interact to form resilience responses. in tourism receipts leads to economic growth by 0.314%. Strong and positive correlation was explored between tourists’ receipts and economic growth meanwhile the results of regression analysis indicate that tourists’ receipts significantly impact on the economic growth. growth. The partial correlation coefficient between a pair of variables measures the correlation, between the pair of variables after removing (partialling out) the effect of the other variables, included in the model. Annual data from 1989 to 2018 was used. demand and Turkey’s economic growth over the period 1990-2008. The theoretical argument of tourism demand under neoclassical economic theory usually assumes a multi-stage budgeting process. Economic computation and economic cybernetics studies and research / Academy of Economic Studies. the period 1980–2007. It takes account of constraints on development, such as social and community interests and the sustainable use of tourism and recreation resources, and inputs into the production process. Concepts and Issues, Sharply, R, Telfer, DJ (ed). In our case, the cardinal relationship between the development of the tourism industry and the economic growth in the Beijing region of China have managed to provide strong empirical support to the earlier stated notions and to the literature alike. Tourism Economics is an international peer reviewed journal, covering the business aspects of tourism in the wider context. This type of reduced. Please check you selected the correct society from the list and entered the user name and password you use to log in to your society website. That is, as soon as standard, income determinants are included, TOUR (i.e., international arrivals, In Panel C, we experiment with alternative model specifications as well as alternative, measures for international tourism, education and R&D. Simply select your manager software from the list below and click on download. Quantile regression. For more supporting evidence of the positive relationship b. see Cortez-Jimenez (2008), Croes and Vanegas (2008), Belloumi (2010). Oh, CO. (2005). Getz, D. (2008). capita distribution towards the right tail when all the independent variables have zero values, which is what we will expect. Assuming our findings, are valid, a second implication is the need for finer detailed understandings of how tourism, would best support standard income factors. The grey band around the dot, = 0.1, 0.2, …, 0.8, 0.9 quantiles. motivated a growing academic literature testing the tourism-led growth hypothesis (TLGH). This paper examines the economics of wildlife tourism in Africa. economic theories and principles should be done. Each chapter combines theory and practice and international case studies are provided. It demonstrates that as well as generating large revenues for governments, wildlife tourism makes significant contributions to other national economic goals such as foreign exchange earnings and employment creation. This theory states that tourism and hospitality needs the support of other industries. data from WDI, includes 109 countries over the period from 1995 to 2011. Comparing the Economic Performance of Dependent, Balaguer J. each panel represents the 95% confidence band for the quantile regression coefficients. © 2008-2021 ResearchGate GmbH. an assortment of different proxy variables. Massidda, C., and Mattana, P. (2013). In, Column (3), we utilize patent applications to measure R&D. • These can be viewed as ‘good practice’ for local government and tourism planning. FEEM Working Paper No. Based on this evidence, it may be stated that tourism directly affects Turkey's economic growth. The results suggest that to promote sustainable tourism development, TCC management should focus on environmental and tourists management policies, such as external environment improvement, behaviour rules and ecological concept establishment in personal daily life. Our findings suggest a bidirectional causal link between tourism and pollutant emission as well as between energy and pollutant emission while the results show a unidirectional causality flowing from economic growth to carbon dioxide emission. In 2014, the direct and indirect contribution of the Greek tourism industry to total GDP and employment reached 17.3% and 19.2%, respectively (WTTC, 2015). Romer, P. M. (1990). In another example that supports, our conclusions, Vanegas and Croes (2003) find that in the case of the, international tourism has been the most successful growth oriented sector of the economy since, the late 1980s, in large part because it has been part of a broader export oriented and neo-liberal, A natural extension of our research is to investigate through which standard income, determinants tourism development affects economic growth. Tourism, capital good imports and. The empirical specification in extant literature typically takes the following form (e.g., is greater than zero; increases in tourism activities are associated with, increases in income (i.e., economic growth). Moreover, the results indicate that there is unidirectional Granger causality flow from tourism to economic growth in Bahrain. The main goal of the paper is to analyze the level of success, but also the shortcomings of the proposed and implemented state measures, as well as the main characteristics of the tourist movements in the tourist season realized in crisis in North Macedonia. test, Co-integration approach, and Granger Causality test. (2011). The Cobb-Douglas production function is the most commonly used production function, in macroeconomics because of its well-known and superior properties (see Solow, 1956). Tourism and economic development issues. While exceptions exist, previous, international tourism and economic growth. In Tourism and Development: International Journal of Tourism Research, = 0.1, 0.2, …, 0.8, 0.9. The internal revenue generated from tourism-related activities is taken as being the main indicator for the tourism industry, while economic growth is determined by GDP (gross domestic product). We extend the literature by investigating if tourism development is an additional determinant of income in the presence of the standard income determinants (such as capital accumulation), or if the effects of tourism development on economic growth work through the standard income determinants, instead. Tourism and economic development: a survey. For instance, exports are measured the same way in GDP as in international tourism. The Relationship between Tourism Receipts, Real Effective Exchange, Dristakis, N. (2004). (2006). As we can see, as soon as standard income factors are added, TOUR (i.e., international, arrivals) becomes statistically insignificant. Tourism as a long-run economic growth factor: the. Other results show that international tourism Granger-causes trade, while trade Granger-causes economic growth in Kenya in both the short and the long run. In terms of, practical implication, our results suggest that governments should help the tourism industry, expand to the extent that tourism is shown to support growth in the standard income factors, in, particular capital accumulation. Although studying the characteristics of tourism is a comparably new era starting in th… Instead, tourism’s contribution to the long-term growth of an economy comes through its role as an integral part of a broader development strategy that is more generally focused on standard income determinants. There is no doubt that international travel and, tourism comprises a major part of the global economy and is the largest service sector in, international trade (Lew, 2011). The results are presented in, Figure 2. (Western) ideology, deemed any country with "non-western" or traditional social, political and economic structures as "undeveloped" or "underdeveloped". They argue that ELG suffers from a fallacy of composition, in that not all developing countries can pursue it simultaneously, and recommend a shift to domestic demand-led growth (DDLG). collection of development indicators, compiled from officially recognized international sources. Manufactured exports, capital good imports and economic growth: Armstrong, H.W. using panel data. Access to society journal content varies across our titles. 5 Reviews. Following Gunduz and Hatemi-J (2005), we use the number of international tourist, arrivals as our measure of tourism activity (TOUR). function for appropriate estimation, we perform logarithmic transformation on both sides: R&D (RND) and education (EDU) are well-known to have important influence on, productivity (e.g., Romer, 1990; Hall & Jones, 1999). Tourism and economic growth: Does country's size matter? In the end, it is about achieving a golden combination between ELG and DDLG. Therefore, thanks to the recognition of AirDNA data, such statistical analysis has become possible. Alam, M.I. Following the economic growth literature, research and development expenditure (% of GDP) is, used to measure R&D, and average years of schooling (age 25+) is employed as a proxy for, education. technique. (7). Our findings indicate that investments in tourism in and of itself appear to be insufficient for economic growth. Our expanded Cobb-Douglas based production model is, estimated using ordinary least squares regressions and the estimated results are checked for, distributional robustness using quantile regression and model misspecification robustness using. Login failed. According to economic theory, labor, capital, and resource are significant factors of economic growth, Using resilience theory as a framework, we comparing two (or three) village communities in terms of their response to two different types of rapid tourism development: (1) mixed local and external, Convene one or more panels examining Tourism Geographies at the Institute of Australian Geographers Conference 11-14 July 2017. A Panel Granger Causality Approach, The Positive Role of the Tourism Industry for Dubai City in the United Arab Emirates, Impact of Tourism Industry on the Economic Growth of Sri Lanka, Residents Perceptions Toward Tourism as a Community Development Tool: A Case of Sultanate of Oman, Role of foreign tourist arrivals (FTAs) from Bangladesh in Indian tourism development: A segment-wise analysis, The Undisrupted Growth of the Airbnb Phenomenon between 2014–2020. eds., pp. However, the effects of the, various economic variables on income may not be the same across different portions of the GDP. For us, the importance of tourism is what the tourist lives and experiences during his holiday and the role he or she can play in the sustainable development of a country. Österreichisches Institut für Wirtschaftsforschung, Ein Entscheidungsmodell für Konsumieren und Sparen, Ein Exportallokationsmodell für die westlichen Industrieländer, Alternative Modelle und Hypothesen der Konsum- und Sparentscheidung, Makrookonomische Aspekte des Reiseverkehrs, Linear Expenditure System and Demand Analysis, Statistical Analysis of Econometric Methods. A few studies have discussed this issue empirically. If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Barro, R. J., and J. W. Lee, 2013, A new data set of educational attainment in the world, 1950, Becker, C. and George, B.P. Growth, development and tourism in a small economy. The research is based on secondary data by applying descriptive statistics considering the published reports of the Indian Government from the Ministry of Tourism. The least squares, regression results reported in Tables 2 provide estimates of the, independent variables on the dependent variable, the logarithm of GDP per capita. In the literature review, the authors discuss some of the developments brought by the tourism industry in Dubai, including cultural and infrastructure development, such as roads and airports. ADF tourism development in seven Mediterranean countries. White, H., 1980, A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test. The causal relationship between international tourism receipts and GDP is examined for the period 1980Q1 - 2004Q2. However, as soon, as we take into account capital accumulation, R&D, and education, tourism activity does not, show any marginal explanatory power. Economic and Social Benefits from Tourism. textbooks (e.g., Mankiw, 2013), and is still widely used (e.g., Ng and Zhao, 2011). per capita using the new heterogeneous panel cointegration arrivals because such data are available for a larger number of countries over our sample period. This estimate is quite a bit, higher than the least-squares regression estimate of 0.562 in Panel A of Table 2, which suggests, that there appear to be outliers in the data since the values of estimated average (least-squares, = 0.5 quantile regression) effects of log(ARR) on the dependent. In his landmark work on economic growth, the 1987 Nobel laureate Robert Solow (1956), points out that in the long run, an economy, production and available technology, which can be captured by the (aggregate) production, function. Therefore, we model productivity as a. function of these relevant determinants as follows: . This book emphasizes new aspects such as measurement of tourism (e.g. On the other hand, if tourism works through the standard income, determinants, the policy implication is that governments should help the tourism industry expand. Whether international tourism can lead to economic growth is an important macroeconomic question for both policy makers and investors. In contrast, Eq. If tourism is an, additional determinant of income, we expect that, To capture the long-run relationship between tourism and growth, we focus on the cross-, sectional regression where data are averaged over the entire sample period for each country, following the growth literature (e.g., Barro, 1991). Tourism as a long-run economic growth factor: an empirical investigation, Dritsakis, N. (2012). The contribution of tourism development to economic growth in the Korean, Ongan S. and Demiroz, DM. Import Substitution 4. Policy makers need to decide where to invest public revenues and how to allocate incentives to, encourage the long term economic livelihood of citizens. The study uses an ARDL-bounds testing approach to examine these linkages and also incorporates trade as an intermittent variable between tourism, This study examines the relationship between tourism development and economic growth in Tanzania – using the newly developed ARDL-Bounds testing procedure. tourism may also have fewer environmental and social impacts than extractive industries. development with trade liberalization policies generated positive economic impact for Indonesia, including increased economic production, reduced government deficits, and a lower national, balance of trade. Tourism Demand, Economic Theory And Econometrics: An Integrated Approach. tourism development grows not independently but in conjunction with other economic policies. Using quarterly data for Greece during the period 2000q1 to 2013q2, we estimated results as a tourism multiplier of 1.21. Johansen technique is used and vector error correction modeling (VECM) is incorporated into the Granger causality tests. Sugiyarto, G., Blake, A. and Sinclair, M.T. Tourism and economic growth in, Latin American countries: a panel data approach. Tourism industry is a key element which accelerates the economic growth by earning high foreign exchange and reducing poverty by providing direct and indirect employment opportunities to locals. Development, Research Policy 41, 358-375. Our main. Foreign Exchange Recommended In our analysis, we find that: control for standard income factors in our data, international tourism had a statistically, significant association with growth; however, as soon as we took into account the standard, income determinants, tourism no longer maintain, major international tourism economies, and even if heterogeneity across countries, Our findings suggest that tourism development affects income through the standard income, Please note that our findings do not suggest that tourism has no role to play in national or, local economic development. The model should describe not only how the factors of, production as well as technology determine the output of an economy, but also how the factors, of production and technology are determined by their relevant determinants including tourism, development. Journal of Travel Research 1988 26: 4, 38-43 Download Citation. Dordrecht: Kluwer Academic Publisher. Empirically, an extension of Solow (1956) and estimate our model with, find that as soon as we take into account standard income determinants, international tourism, loses its marginal explanatory power, even within predominantly tourism economies. Summary. causality between the two variables. Journal of Travel Research 1988 26: 4, 38-43 Download Citation. The sustained demand for Travel &, Tourism, together with its ability to generate high levels of employment continues to, prove the importance and value of the sector as a tool for economic development and job, The practical importance of international tourism on economic development has. Egon Smeral. implications for predicting the effects of global warming. (2003). Find out about Lean Library here, If you have access to journal via a society or associations, read the instructions below. line with the concept of tourism economy and inter-sectorial connections within an economy. Our, findings indicate that investments in tourism in and of itself appear to be insufficient for, economic growth. (6) summaries the growth theory model pioneered by Solow (1956) but. A SVECM Analysis of the Relationship between. The results are reported in Panels B and C of Table 2. Numerous researchers have applied a multitude of econometric and statistical models in order to advance and support their point of view, using both local and global data. economic growth and tourism development in a multivariate model unlimited print, The results are found to hold irrespective of whether the causality is estimated in the short run and long run. Theory of Tourism Demand. The data used in this study are annual, covering growing faster than other significant sectors such as financial and business services, transport and manufacturing. Moving from the left to the right in each panel, the vertical, distances of the dots in the dot-dash line represent the, the quantile regression coefficient. the study showed that there is a positive relationship between tourism development and economic development in the long-run. Tourism Development and Economic Growth in Tanzania: Empirical Evidence from the ARDL-bounds Testing... Empirical Study on Tourism and Economic Growth of Bahrain: An ARDL Bounds Testing Approach, Time-series Evidence for Tourism-led Growth Hypothesis: A Case Study of Jordan, Tourism-Led Growth Hypothesis: A Case Study of Pakistan, Tourism development and economic growth–a nonlinear approach. We also estimated that the tourism industry generated an increase of 1.0% in the Greek GDP for the year 2013. Incentives 5. Consistent with most previous studies, tourism has a statistically significant positive association with GDP per capita. Furthermore, as international tourism … In fact, it is because of the positive economic impacts that most destinations embark on their tourism journey. 26, online at, Social Science Research Network http://ssrn.com/abstract=504482, accessed 27 October, Felipe, J. In Column (1), we only include the number. In Column (2), we employ adult literacy rate as a proxy for education. The impulse response analysis also shows that the responses of carbon dioxide emissions to shocks in economic growth and energy consumption appear positive within ten years period while the response to shocks in tourism appear negative within the first four years but revert to the equilibirium in the fifth year providing some important insights for policy makers supporting sustainable tourism. instance, the Cobb-Douglas production function is consistent with the law of demising returns, which is an essential feature of modern growth theories. For example, the vertical axis of the bottom panel in the figure, represents the magnitude of the regression quantile coefficients of log(ARR) across, the vertical distances of the dots in the dot-dash line represent the magnitudes of the regression. The World Travel and Tourism Council succinctly summarized the important role that, travel and tourism play in the growth of global econo, s total contribution to the global economy rose to, 9.5% of global GDP (US $7 trillion), not only outpacing the wider economy, but also.