Relationship between international tourism and economic growth worldwide

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Published: nov. 9, 2020
Keywords:
Tourism, Economic growth, Cointegration, Panel data, Causality

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Christian González
Universidad Nacional de Loja
Brayan Tillaguango
Universidad Nacional de Loja

Abstract

The flow of international tourists has increased significantly in recent years due to various factors that influence people's will, motivating them to visit different tourist spots. However, there is still limited empirical evidence on the effect of tourist flows on output globally. This research aims to examine the causal relationship between income from tourism and Gross Domestic Product worldwide. We used the cointegration techniques of Pedroni (1999), Westerlund (2007), and causality Dumitrescu & Hurlin (2012) to evaluate the relationship between the variables. To assess the cointegration vector's strength, we apply the PDOLS dynamic ordinary least squares panel method for individual countries and the DOLS dynamic ordinary least squares model for groups of countries. We found solid empirical evidence suggesting that income from tourism and income growth have an equilibrium relationship in the long term, but not in the short term. The cointegration vector's strength between output and income from tourism is strongest in high- and low-income countries. The causality test results suggest that income and income from tourism have a unidirectional relationship in upper-middle-income countries and globally. Rent does not cause tourism income in all groups of countries. A possible political implication derived from this research is that tourism should be promoted so that it does become a driver of economic growth.

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How to Cite
González, C., & Tillaguango, B. (2020). Relationship between international tourism and economic growth worldwide. Revista Económica, 8(1), 67–75. Retrieved from https://revistas.unl.edu.ec/index.php/economica/article/view/843
Issue
Vol. 8 No. 1 (2020): Revista Económica vol 8 (Enero-Junio 2020)
Section
RESEARCH ARTICLES
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