Tourism Led Growth: Evidence from Panel Cointegration Tests

The Tourism-Led-Growth hypothesis is investigated in this study. We employ a panel of 187 countries for a period that spans from 1995 to 2009. Panel unit root tests confirm that both GDP and tourism receipts are non-stationary. Alternative panel cointegration tests are employed and the results suggest that there is a long-run relationship between tourism receipts and GDP. Different specifications that take into account the accounting effect, confirm the latter. Finally, the long-run elasticities of tourism receipts on GDP are found to take values close to 0.2.