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Tourism and Economic Growth in Latin American Countries(LAC): Further Empirical Evidence

Author

Listed:
  • Bichaka Fayissa
  • Christian Nsiah
  • Badassa Tadasse

Abstract

From 1995-2007, worldwide tourist arrivals increased about 68.2 percent (or an average annual growth rate of about 5.2 percent) from 534 million to 898 million (UNWTO, 2008). Over the same period, Latin America countries (Central and South America) have experienced a rise in tourist arrivals from 14.3 million to 27.9 million (about 49 % growth) and tourist receipts growth from $2.3 billion to $3.7 billion (about 61 % growth), respectively. The tourism industry in Latin American countries (LAC) has also experienced a sizable increase in annual market share growth rate of 8.7 percent in 2004. Despite this fact, there are only few empirical studies that investigate the contributions of tourism to economic growth and development for Latin American economies. Using a panel data of 17 Latin American countries for the years that span from 1995 to 2004, this study investigates the impact of the tourism industry on the economic growth and development Latin American countries within the framework of the conventional neoclassical growth model. The empirical results show that revenues from the tourism industry positively contribute to both the current level of gross domestic product and the economic growth of LACs as do investments in physical and human capital. Our findings imply that Latin American economies may enhance their economic growth by strategically strengthening the tourism industry while not neglecting the other sectors which also promote growth.

Suggested Citation

  • Bichaka Fayissa & Christian Nsiah & Badassa Tadasse, 2009. "Tourism and Economic Growth in Latin American Countries(LAC): Further Empirical Evidence," Working Papers 200902, Middle Tennessee State University, Department of Economics and Finance.
  • Handle: RePEc:mts:wpaper:200902
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    File URL: http://capone.mtsu.edu/berc/working/TourismLAC03-5-09WP.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Grégoire Garsous & David Corderi & Mercedes Velasco, 2015. "Tax Incentives and Job Creation in the Tourism Industry of Brazil," IDB Publications (Working Papers) 91996, Inter-American Development Bank.
    2. Klytchnikova, Irina & Dorosh, Paul, 2012. "Tourism sector in Panama : regional economic impacts and the potential to benefit the poor," Policy Research Working Paper Series 6183, The World Bank.
    3. repec:eee:touman:v:33:y:2012:i:4:p:790-801 is not listed on IDEAS
    4. Ma, Tao & Hong, Tao & Zhang, Haozhe, 2015. "Tourism spatial spillover effects and urban economic growth," Journal of Business Research, Elsevier, vol. 68(1), pages 74-80.
    5. Antonakakis, Nikolaos & Dragouni, Mina & Filis, George, 2013. "Time-Varying Interdependencies of Tourism and Economic Growth: Evidence from European Countries," MPRA Paper 48715, University Library of Munich, Germany.
    6. Lingaraj MALLICK & Ummalla MALLESH & Jaganath BEHERA, 2016. "Does tourism affect economic growth in Indian states? Evidence from panel ARDL model," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(606), S), pages 183-194, Spring.
    7. 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.
    8. Giscard Assoumou Ella, 2013. "Impact of international income, prices and monetary shocks on real exchange rate in eight African economies: An empirical study," The Empirical Econometrics and Quantitative Economics Letters, Faculty of Economics, Chiang Mai University, vol. 2(3), pages 41-54, September.

    More about this item

    Keywords

    Tourism; Economic Growth; Latin American Countries; Dynamic Panel Data; Fixed Effects; Random Effects; Arellano-Bond Models;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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