Tourism and Economic Growth in Latin American Countries(LAC): Further Empirical Evidence

Bichaka Fayissa, Christian Nsiah and Badassa Tadasse
Authors registered in the RePEc Author Service: Bedassa Tadesse

No 200902, Working Papers from Middle Tennessee State University, Department of Economics and Finance

Abstract: From 1995-2007, worldwide tourist arrivals increased about 68.2 percent (or an average annual growth rate of about 5.2 percent) from 534 million to 898 million (UNWTO, 2008). Over the same period, Latin America countries (Central and South America) have experienced a rise in tourist arrivals from 14.3 million to 27.9 million (about 49 % growth) and tourist receipts growth from $2.3 billion to $3.7 billion (about 61 % growth), respectively. The tourism industry in Latin American countries (LAC) has also experienced a sizable increase in annual market share growth rate of 8.7 percent in 2004. Despite this fact, there are only few empirical studies that investigate the contributions of tourism to economic growth and development for Latin American economies. Using a panel data of 17 Latin American countries for the years that span from 1995 to 2004, this study investigates the impact of the tourism industry on the economic growth and development Latin American countries within the framework of the conventional neoclassical growth model. The empirical results show that revenues from the tourism industry positively contribute to both the current level of gross domestic product and the economic growth of LACs as do investments in physical and human capital. Our findings imply that Latin American economies may enhance their economic growth by strategically strengthening the tourism industry while not neglecting the other sectors which also promote growth.

Keywords: Tourism; Economic Growth; Latin American Countries; Dynamic Panel Data; Fixed Effects; Random Effects; Arellano-Bond Models (search for similar items in EconPapers)
JEL-codes: C33 F14 L83 O40 O54 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-fdg and nep-tur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:mts:wpaper:200902

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