Today tourism represents one of the most dynamic economic sectors of the world. Although majority of international tourism takes place within the developed world, recently tourism has increased significantly in the developing countries, mainly in the Southeast Asian and Pacific countries. This study aims to verify if tourism represents a determinant of growth in such countries. Following the recent empirical literature on growth, and mainly Eugenio-Martin et al. (2004), the paper adopts a dynamic panel data model to test for convergence. The results confirm the importance of tourism in economic growth.
Today,
tourism is one of the most important and dynamic sectors
of the world economy (Lanza and Pigliaru, 1999; Jamieson,
2000; Balaguer and Cantavella-Jorda, 2002; Neto, 2003).
Along with related activities, tourism and general travel
not only account for 11% of world`s Gross Domestic Product
(GDP), but exports of tourism services is about 6-7% of
world`s total exports of goods and services (Roe, Ashley,
Page and Meyer, 2004, p. 6).
Although
the majority of international tourism still takes place
within the developed world, recently tourism to developing
countries is becoming a significant and increasing phenomenon.
According to WTO, today over 40% of global tourism take
place in the developing world. Such phenomenon has attracted
the attention of economists in order to understand if tourism
can actually prove to be a key-sector for economic growth
and development in developing countries. The growing flows
of tourism, in fact has considerable positive as well as
negative consequences on local economies. Nevertheless,
the contribution of tourism activity to a country`s economy
is not easily recognized, not only because tourism involves
many different products, such as transportation, mails,
entertainment, etc., but also because some products (for
example, a meal in a restaurant) can be sold to both tourists
and to local residents. In this sense, tourism does not
represent a clearly identifiable industry (Tohamy and Swinscoe,
2000). Anyway, tourism influences employment and business
opportunities for local people and therefore, represents
a source of income for the recipient countries (Holloway,
1998). Moreover, when the existing labor market provides
few employment opportunities, tourism can often represent
the only source of employment for the "weak" labor
force, such as women, unskilled and semi-unskilled workers,
and poor rural people (Roe et al., 2004). Tourism
contributes to government revenues through taxes on incomes
from tourism business and through taxes on goods and services
provided to tourists, such as hotel-room taxes, departure
taxes, and value added taxes (Taylor, Fredotovic, Povh and
Markandya, 2003). Moreover, since tourism requires better
public infrastructure and utilities, it can stimulate the
local government to improve the infrastructure, leading
to positive benefits of local populations (Roe et al.,
2004). And lastly, tourism not only represents the main
source of foreign exchange earnings for many developing
countries (Woods, Perry and Steagall, 1991), but can also
help to diversify the economy, since it represents a good
alternative to traditional sectors in developing economies,
such as agriculture and manufacturing (Vaugeois, 2000).
Moreover, many of these effects are often enhanced by the
so-called "multiplier effect" which occurs since
money spent by tourists will be re-spent by the recipients,
augmenting the total money circulation in the economy. Together
with benefits, tourism can lead several negative effects
to the local economies. Criticism has been expressed as
regards to employment generated, as tourism sector is often
characterized by seasonality both natural (because of climate)
and institutional (because of the distribution of holidays),
thus, employment related to tourism frequently exhibits
"seasonal peaks" involving the hiring of temporary
and part-time workers.
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