Research Note: Tourism and Economic Growth in Latin American Countries – Further Empirical Evidence

Abstract

Using panel data that span from 1990 to 2005, the authors investigate the impact of tourism on the economic growth of 18 heterogeneous Latin American countries within the framework of the conventional neoclassical growth model. Results from the empirical models show that revenues from the tourism industry contribute positively to both the current level and the growth rate of the per capita GDP of the countries in the region, as do investments in physical and human capital. The findings imply that Latin American economies may enhance their economic growth in the short run by strengthening their tourism industries strategically, while not neglecting the traditional sources of economic growth.

Oil prices, tourism income and economic growth: A structural VAR approach for European Mediterranean countries

“… First, there is evidence that causality indeed runs from the tourism-sector to the broader economy -a hypothesis known as the tourism led economic growth (TLEG) hypothesis (see, inter alia, Fayissa et al, 2011;Schubert, 2011;Brida et al, 2010;Zortuk, 2009;Lee and Chang, 2008;Croes and Vanegas, 2008;Carrera et al, 2008;Soukiazis and Proenca, 2008;Kim et al, 2006;Vanegas and Croes, 2003;Blake and Sinclair, 2003;Balaguer and Catavella-Jorda, 2002). …”

How strong is the linkage between tourism and economic growth in Europe?

“…In particular, it is believed that tourism (i) increases foreign exchange earnings, which in turn can be used to finance imports (McKinnon, 1964), (ii) it encourages investment and drives local firms towards greater efficiency due to the increased competition (Krueger, 1980;Balaguer and Cantavella-Jorda, 2002), (iii) it alleviates unemployment, since tourism activities are heavily based on human capital (Brida and Pulina, 2010) and (iv) it leads to positive economies of scale thus, decreasing production costs for local businesses (Andriotis, 2002;Croes, 2006). Other recent studies which find evidence in favour of the TLEG hypothesis include Sugiyarto et al (2003), Durbarry (2004), Parrilla et al (2007), Croes and Vanegas (2008), Proenca and Soukiazis (2008), Fayissa et al (2011), Pratt (2011), Dritsakis (2012), Eeckels et al (2012), Ivanov and Webster (2013), Surugiu and Surugiu (2013).…”

Segmenting the Latin American travel market to South Africa

“…Brida, Risso and Bonapace (2008), Eugenio-Martin, Martín Morales and Scarpa (2004) and Fayissa, Nsiah and Tadesse (2011) similarly analyse the tourism and economic growth in Latin American countries. Torres (2003) focuses on the linkages between tourism and agriculture in Mexico while Paus (2009) analyses the implications of the rapid economic rise of China for the development prospects of Latin America.…”