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Tourism and Growth in the Caribbean – Evidence from a Panel Error Correction Model


  • Nicholas Apergis

    (Department of Banking and Financial Management, University of Piraeus, Karaoli and Dimitriou 80, Piraeus, Attiki 18534, Greece)

  • James E. Payne

    (Regional Vice Chancellor for Academic Affairs and Research, University of South Florida Polytechnic, 3433 Winter Lake Road, Lakeland, FL 33803, USA)


This empirical study examines the causal relationship between tourism and economic growth for a panel of nine Caribbean countries over the period 1995–2007. Pedroni (1999, 2004) panel cointegration tests reveal a long-run equilibrium relationship between real GDP per capita, the real effective exchange rate and international tourist arrivals per capita. The panel error correction model reveals bidirectional causality between tourism and economic growth in both the short run and the long run.

Suggested Citation

  • Nicholas Apergis & James E. Payne, 2012. "Tourism and Growth in the Caribbean – Evidence from a Panel Error Correction Model," Tourism Economics, , vol. 18(2), pages 449-456, April.
  • Handle: RePEc:sae:toueco:v:18:y:2012:i:2:p:449-456
    DOI: 10.5367/te.2012.0119

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    References listed on IDEAS

    1. Pedroni, Peter, 2004. "Panel Cointegration: Asymptotic And Finite Sample Properties Of Pooled Time Series Tests With An Application To The Ppp Hypothesis," Econometric Theory, Cambridge University Press, vol. 20(3), pages 597-625, June.
    2. Hazari, Bharat R. & Kaur, Charanjit, 1995. "Tourism and welfare in the presence of pure monopoly in the non-traded goods sector," International Review of Economics & Finance, Elsevier, vol. 4(2), pages 171-177.
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    4. Lokman Gunduz & Abdulnasser Hatemi-J, 2005. "Is the tourism-led growth hypothesis valid for Turkey?," Applied Economics Letters, Taylor & Francis Journals, vol. 12(8), pages 499-504.
    5. Paolo Figini & Laura Vici, 2010. "Tourism and Growth in a Cross Section of Countries," Tourism Economics, , vol. 16(4), pages 789-805, December.
    6. Pedroni, Peter, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-670, Special I.
    7. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    8. Nikolaos Dritsakis, 2004. "Tourism as a Long-Run Economic Growth Factor: An Empirical Investigation for Greece Using Causality Analysis," Tourism Economics, , vol. 10(3), pages 305-316, September.
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    2. Colin Cannonier & Monica Galloway Burke, 2019. "The economic growth impact of tourism in Small Island Developing States—evidence from the Caribbean," Tourism Economics, , vol. 25(1), pages 85-108, February.
    3. Radu Radulescu, 2020. "Granger Causality Analysis of the Economic Cycles of the Tourism Industry and the EU Regional Economy," ConScienS Conference Proceedings 014rr, Research Association for Interdisciplinary Studies.
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    5. Johnella Bradshaw & Simron Jit Singh & Su-Yin Tan & Tomer Fishman & Kristen Pott, 2020. "GIS-Based Material Stock Analysis (MSA) of Climate Vulnerabilities to the Tourism Industry in Antigua and Barbuda," Sustainability, MDPI, vol. 12(19), pages 1-22, September.
    6. Antonakakis, Nikolaos & Dragouni, Mina & Filis, George, 2015. "How strong is the linkage between tourism and economic growth in Europe?," Economic Modelling, Elsevier, vol. 44(C), pages 142-155.
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    8. Mina Dragouni & George Filis & Nikolaos Antonakakis, 2013. "Time-Varying Interdependencies of Tourism and Economic Growth: Evidence from European Countries," FIW Working Paper series 128, FIW.
    9. Yong Su & Jacob Cherian & Muhammad Safdar Sial & Alina Badulescu & Phung Anh Thu & Daniel Badulescu & Sarminah Samad, 2021. "Does Tourism Affect Economic Growth of China? A Panel Granger Causality Approach," Sustainability, MDPI, vol. 13(3), pages 1-12, January.
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    11. Brito, Joao, 2015. "Country Size and Determinants of Economic Growth: A Survey with Special Interest on Small States," MPRA Paper 61273, University Library of Munich, Germany.
    12. Can Tansel TUGCU & Mert TOPCU, 2018. "The impact of carbon dioxide (CO2) emissions on tourism: Does the source of emission matter?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(614), S), pages 125-136, Spring.
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    14. Alam Rehman & Amir Ishaque & Shumaila Malik & Shams Ur Rehman & Arif Hussain & Muhammad Khan & Muhammad Zeeshan & Fakhr E. Alam Afridi, 2021. "Exploring Asymmetric Nexus Between Tourism, Economic Growth and CO2 Emissions in the Context of Pakistan," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 338-345.
    15. Antonakakis, Nikos & Dragouni, Mina & Eeckels, Bruno & Filis, George, 2015. "Tourism and economic growth revisited: Empirical evidence from a Panel VAR approach," MPRA Paper 67419, University Library of Munich, Germany.
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    More about this item


    tourism arrivals; real GDP; real exchange rate; Granger-causality; Caribbean;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes


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