The Tourism-led Growth Hypothesis: Empirical Evidence from Colombia

Brida, Juan Gabriel and Pereyra, Juan S. and Risso, Wiston Adrián and Devesa, María Jesús Such and Aguirre, Sandra Zapata (2008): The Tourism-led Growth Hypothesis: Empirical Evidence from Colombia. Published in: TOURISMOS: An International Multidisciplinary Journal of Tourism , Vol. 4, No. 2 (15 April 2009): pp. 13-27.

Abstract

The purpose of this study is to investigate the contribution of tourism to economic growth in Colombia. First, we perform an ex-post analysis and quantify the contribution of the tourism to economic growth from the early 90’s until 2006 by disaggregating growth of real GDP per capita into economic growth generated by tourism and by other industries. Second, we analyze if international tourism is a strategic factor for long-run economic growth for Colombia. This believes that tourism can cause long-run economic growth it is known in the literature as the tourism-led growth hypothesis. The hypothesis is tested empirically by using the cointegration test by Johansen and the Granger Causality test. We find empirical evidence for one cointegrated vector among real GDP per capita, Colombian tourism expenditures and real exchange rates, where the latter two variables are weakly exogenous to the model. The Granger causality test suggests that causality in this model goes from tourism expenditures to real GDP per capita.

• Item Type: MPRA Paper
• Language: English
• Keywords: tourism impacts; economic growth; GDP, cointegration test, causality test
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M1 - Business Administration; L - Industrial Organization > L8 - Industry Studies: Services > L83 - Sports ; Gambling ; Restaurants ; Recreation ; Tourism

References

Banerjee, A., Dolado, J., Galbraith, J. & Hendry, D. (1993). Co-integration, Error-Correction, and the Econometric Analysis of the Non-Stationary Data. Oxford, University Press.

Brida, J.G., Pereyra, J.S. & Such, M.J. (2008a). Evaluating the Contribution of Tourism on Economic Growth. Anatolia: an International Journal of Tourism and Hospitality Research, Vol. 19, No.2 (Winter), pp.351-357.

Brida, J.G., Pereyra, J.S., Such, M.J. & Zapata, S. (2008b). La contribución del turismo al crecimiento económico: el caso de España, Francia, Italia, U.K. y Estados Unidos. Cuadernos de Turismo, No.22, pp.35-46.

Cabal, J.A. (2007). Publisher of Living and Travel Magazine, No.22, pp.4.

Engle, R. & Granger, C. (1987). Co-integration and Error Correction: Representation, Estimation and Testing. Econometrica, Vol. 55, pp.251-276.

Granger, C. (1988). Some recent developments in a concept of causality. Journal of Econometrics, Vol. 39, pp.199-211.

Ivanov, S. & Webster, C. (2007). Measuring the impacts of tourism on economic growth. Tourism Economics, Vol. 13, No.3, pp.379-388.

Johansen, S. (1995). Likelihood-based inference in co-integrated vector autoregressive models. Oxford, University Press.

Johansen, S. (1988). Statistical Analysis of Cointegration Vectors. Journal of Economic Dynamics and Control, Vol. 12, pp.231-254.

Johansen, S. & Juselius, K. (1990). Maximum Likelihood Estimation and Inference on Cointegration-with applications to the Demand for Money. Oxford Bulletin of Economics and Statistics, Vol. 52, pp.169-210.

McCallum, B. (1984). On Low-Frequency Estimates of Long-Run Relationships in Macroeconomics. Journal of Monetary Economics, Vol. 14, pp.3-14.

MCIT. (2007). Press Release. http://www.mincomercio.gov.co/eContent/

MCIT. (2005). Política Sectorial de Turismo. Http://www.mincomercio.gov.co/eContent/Documentos/turismo/2006

MCIT. (2003). Tourism Sector Plan 2003-2006. Http://www.mincomercio.gov.co/eContent/NewsDetail.asp

MCIT. (2003). Tourism in Colombia: A Sector Opportunities. Http://www.mincomercio.gov.co/econtent/Documentos/turismo/2003

MCIT. (2000). Travel Security: Challenge of Colombia competitive. Strategic Plan.Http://www.mincomercio.gov.co/eContent/documentos/turismo/2003

Phillips, P. (1986). Understanding Spurious Regressions in Econometrics. Journal of Econometrics, Vol. 33, pp.311-340.

Shan, J. & Wilson K. (2001). Causality between trade and tourism: empirical evidence from China. Applied Economics Letters, Vol. 8, pp.279-283.