A Panel Cointegration Analysis of the Impact of Tourism on Economic Growth: Evidence from the Middle East Region

Abstract

This paper examines the contribution of tourism industry to the GDP of three selected destinations in the Middle East region: Bahrain, Jordan and Saudi Arabia. We introduce a quadratic functional form and apply the advanced panel cointegration dynamic model with robust estimation to test our hypothesis. Our analysis is based on a comprehensive set of panel data of tourism receipts, education investment, foreign direct investment and fixed capital formation over the period of 1981–2008. The results show a long‐run relationship between tourism growth and GDP. We also show that tourism has a stronger impact on the economy than other related sectors. Copyright © 2013 John Wiley & Sons, Ltd.

The Role of Tourism, Real Exchange Rate and Economic Growth in Singapore: Are there Asymmetric Effects?

“…Researchers used some advanced econometric techniques such as TodaYamamoto causality, the rolling causality test, the rolling cointegration test. Bayer-Hanck cointegration test, the spillover index approach (Lean and Tang, 2010;Hye and Khan, 2012;Tang and Tan, 2013;Salleh et al, 2015;Antonakakis et al, 2015). For example, Lean and Tang (2010) used the rolling causality test to examine stability of the causal relationship between tourism development and economic growth in Malaysia for the period of 1989-2009.…”

“…They pointed out that there would be a long-run relationship and a stable causal relationship between tourism development and economic growth in Malaysia. Salleh et al (2015) used the panel data methods to examine the tourism-growth nexus in three countries in the Middle-East, namely Bahrain, Jordan, and Saudi Arabia, for the period of 1981-2008. They pointed out that there was a significant long-run relationship between tourism development and economic growth in these countries.…”

“…As a global tourism has grown rapidly, tourism sector is considered as an important contributor to stimulate economic growth in developing countries. In other words, tourism sector could be considered as an "engine" of economic growth by earning valuable foreign currencies, creating job opportunities and generating additional government revenues (Koch et al, 1998;Oh, 2005;Gunduz and Hatemi-J., 2005;Kim et al, 2006;Proença and Soukiazis, 2008;Lee and Chang, 2008;Chen and Song Zan, 2009;Hye and Khan, 2012;Hampton and Jeyacheya, 2015;Salleh et al, 2015). Particularly, tourism sector in the small island developing states (SIDS) has played a dominant role in their economic growth process (Hampton and Jeyacheya, 2015).…”

Tourism-Led Growth Hypothesis in Mediterranean Countries: Evidence from a Panel Cointegration and Error Correction Model

“…Po & Huang, 2008;Brida et al, 2015;Balaguer & Cantavella-Jorda, 2002;Dritsakis, 2004;Ongan & Demiroz, 2005;Katırcıoğlu 2009a;Katırcıoğlu 2009b;Zortuk 2009;Belloumi, 2010;Tang, 2011;Holzner, 2011;Lee & Chang, 2008;Payne & Mervar,2010), physical or/and human capital (e.g. Paci & Marrocu, 2014;Durbarry 2004;Cortes-Jimenez & Pulina, 2010;Fayissa et al, 2008;Seetanah, 2011;Holzner, 2011;Capo et al, 2007;Ekanayake & Long, 2012;Kumar & Kumar, 2012); Gökovalı, 2010;Saleh et al,2015) and real exchange rate (Lee & Chien, 2008;Panahi et al, 2015;Dritsakis, 2012;Brida & Giuliani, 2013;Kasimati, 2011;Surugiu & Surugiu ,2013;Tang, 2013) have been used. When reviewing the literature, we depict that import, export or openness variables have also been used in the models (e.g.…”

“…Eeckels et al (2012) and Dritsakis (2004) for Greece; Ongan & Demiroz (2005), Arslantürk & Atan (2012), Gökovalı (2010), Arslantürk et al (2011, Hüsein & Kara (2011), Gunduz & Hatemi (2005), Kaplan & Çelik (2008), Katırcıoğlu (2009a), Zortuk (2009); Öztürk & Acaravcı (2009) for Turkey; Merida & Golpe (2014), Balaguer & Cantavella-Jorda (2002), Nowak et al (2007) Katırcıoğlu (2009b) for Malta.Some studies used panel data method to investigate tourism led growth (e.g. Tuğcu, 2014;Aslan, 2014;Santana-Gallego et al, 2011;Al-Mulali et al, 2014;Dritsakis, 2012;Lee & Chang, 2008;Chou, 2013;Cortes-Jimenez, 2008;Holzner, 2011;Nissan et al, 2011;Caglayan et al, 2012;Ekanayake & Long, 2012;Gökovalı & Bahar, 2006;Saleh et al,2015). Moreover, a few studies using cross-section method are available (e.g.…”