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An empirical investigation of tourism-led growth hypothesis in the European countries: evidence from augmented mean group estimator


  • Wanjun Xia

    (Anhui University of Finance and Economics)

  • Buhari Doğan

    (Suleyman Demirel University)

  • Umer Shahzad

    (Anhui University of Finance and Economics)

  • Festus Fatai Adedoyin

    (Bournemouth University)

  • Abiodun Popoola

    (Ahmadu Bello University)

  • Muhammad Adnan Bashir

    (Nankai University)


Due to urbanization and the need for people to go from one country to another either for commercial purpose or tourism, it is therefore important to determine the extent to which tourism contributes to growth. This article aims to investigate the tourism-led growth hypothesis in a sample of 34 European countries utilizing the yearly data from 1995 to 2015. The research work makes use of 8 tourism indicators, which cover different dimensions of tourism sector development such as foreign visitors' spending, and international tourist arrival. For empirical analysis, the study accounts key determinants of growth such as capital, labor and energy (renewable and non-renewable) consumption. The results from common correlated effects (CCE) augmented mean group (AMG) and groped-mean estimators confirms that there is a positive relationship between tourism, labour, capital and GDP insinuating the presence of tourism-led growth hypothesis in the European countries. Also, findings from the FMOLS show that changes in the variables leads to a proportional change in GDP. Specifically, the evidence shows that the tourism indicators play an indispensable role in promoting economic development, along with energy consumption, capital, and labor. Sustainable Combating environmental issues associated with foreign arrivals, renewable energy consumption should be encouraged to reduce environmental externalities to ensure sustainable environments for businesses and tourists’ arrivals.

Suggested Citation

  • Wanjun Xia & Buhari Doğan & Umer Shahzad & Festus Fatai Adedoyin & Abiodun Popoola & Muhammad Adnan Bashir, 2022. "An empirical investigation of tourism-led growth hypothesis in the European countries: evidence from augmented mean group estimator," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 21(2), pages 239-266, May.
  • Handle: RePEc:spr:portec:v:21:y:2022:i:2:d:10.1007_s10258-021-00193-9
    DOI: 10.1007/s10258-021-00193-9

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    2. Pasieka Stanislava & Kirdan Oleksandr & Braslavska Oksana & Kosmidailo Inna & Oliinyk Olga & Povorozniuk Inna & Drobotova Maryna, 2022. "The Economic Role of Tourism in European Countries’ Sustainable Development," Management Theory and Studies for Rural Business and Infrastructure Development, Sciendo, vol. 44(3), pages 323-337, September.
    3. Xi Wang & Bisharat Hussain Chang & Emmanuel Uche & Qianli Zhao, 2024. "The asymmetric effect of income and price changes on the consumption expenditures: evidence from G7 countries using nonlinear bounds testing approach," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 23(1), pages 35-53, January.
    4. Mengzhen Wang & Xingong Ding & Baekryul Choi, 2023. "FDI or International-Trade-Driven Green Growth of 24 Korean Manufacturing Industries? Evidence from Heterogeneous Panel Based on Non-Causality Test," Sustainability, MDPI, vol. 15(7), pages 1-20, March.
    5. Gulsum Akarsu, 2023. "Interrelationships between Tourist Arrivals, Exchange Rate, Inflation, and Economic Growth: Empirical Evidence for Turkiye," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 9(1), pages 49-76, June.

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    More about this item


    Tourism; Growth; European countries; Energy consumption; AMG estimator;
    All these keywords.

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • 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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