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

Abstract

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.

The Economic Role of Tourism in European Countries’ Sustainable Development

“…Băndoi et al (2020) found on the basis of cluster analysis that tourism development has a positive impact on quality of life. W. Xia et al (2022) confirmed the existence of a positive relationship between tourism, labour, capital and GDP, indicating the hypothesis of economic growth in European countries due to tourism. investigated the resilience of the tourism industry during the COVID-19 pandemic using statistical data from 35 countries in Europe and developed potential options for post-pandemic tourism recovery harmonised with the global Sustainable Development Goals.…”

Does Tourism Induce Sustainable Human Capital Development in BRICS Through the Channel of Capital Formation and Financial Development? Evidence From Augmented ARDL With Structural Break and Fourier-TY Causality

“…Thus, human capital accumulation is seen as a critical production element in the economy's overall production function at the macro level. From a microeconomic standpoint, education boosts one's employment seeking ability and increases their earning capability (Xia et al, 2021 ). Thus, human capital is defined at the micro-level as the component of education that adds to an individual's labor productivity and profits while also serving as a critical component of company output (Haltiwanger et al, 1999 ).…”

The effect of global volatility, uncertainty and geopolitical risk factors on international tourist arrivals in Asia

“…A major strand in the literature has deliberated on the significance of financial stress, monetary policy uncertainty and VIX in impacting the real sector Husted., (2020). However, the literature in the context of tourism economics is relatively nascent (Akdağ et al, 2019; Grechi et al, 2017; Usman et al, 2021; Xia et al, 2021). In the empirical strand of literature, wide‐ranging studies explore the negative effect of economic policy uncertainty on tourism, however, the conclusions continue to be ambiguous (Balli et al, 2018; Singh et al, 2019; Tiwari et al, 2019; Wu & Wu, 2021).…”

“…A major strand in the literature has deliberated on the significance of financial stress, monetary policy uncertainty and VIX in impacting the real sector Husted., (2020). However, the literature in the context of tourism economics is relatively nascent (Akda g et al, 2019;Grechi et al, 2017;Usman et al, 2021;Xia et al, 2021).…”