Isabel Cortés-Jiménez

Tourism, Capital Good Imports and Economic Growth: Theory and Evidence for Spain:

Exports are generally assumed to promote long-term growth through two main channels. The first, known as the export-led growth (ELG) hypothesis, is by enhancing economy-wide efficiency. This mechanism has recently been applied to tourism services exports (the tourism-led growth, TLG, hypothesis). The second channel is the financing of imports of foreign capital goods, thus raising the level of capital formation. Although this channel turns out to be empirically important, no theoretical rigorous foundation has yet been provided. Moreover, it has never been investigated for tourism exports. This paper fills two gaps. On the theoretical side, it provides a clear justification of the role of capital good imports in the link between exports and overall economic growth. A model has been built to examine this so-called EKIG hypothesis (exports → capital good imports → growth) in which sustained economic growth is achieved by imports of foreign capital entirely financed through inbound tourism. This model highlights a mechanism of international transmission of economic growth from the tourist-generating country (the tourism services importer) to the tourist-receiving economy (the tourism services exporter) through trade and terms-of-trade movement without any technological progress, research and development (R&D) activity or accumulation of human capital in the host economy. On the empirical side, this study constitutes the first attempt to examine the role of tourism exports on economic growth through capital good imports. The authors use Johansens cointegration approach and the multivariate Granger causality test to analyse the TKIG (tourism → capital good imports → growth) hypothesis in the Spanish economy.

Inbound tourism and long-run economic growth

There is an upsurge of literature investigating the relationship between inbound tourism expansion and economic growth with special emphasis on developing countries. Some countries – such as Spain and Italy – can be taken as examples of demonstrating such a successful trajectory. This paper provides an empirical investigation of the evolution of the Spanish and Italian economies and their respective tourism sectors from the 1950s and 1960s, respectively. This research is theoretically based on the literature on demand-based growth and the methodology adopted is that of the integration, cointegration and multivariate Granger causality tests. The results show the influencing role of inbound tourism for both economies.

Has the tourism-led growth hypothesis been validated? A literature review

Over 10 years have passed since the first paper on the tourism-led growth hypothesis (TLGH) was published in 2002. Since then, a wave of studies has appeared trying to understand the temporal relationship between tourism and economic growth. Hence, it is possible to provide an assessment in terms of econometric methods used and main empirical findings achieved so far. This paper presents an exhaustive review of approximately 100 peer-reviewed published papers on the TLGH. An overview on the economic theoretical framework behind the TLGH is also provided. Notably, the results present an increasing diversification in the econometric modelling used. With a few exceptions, the empirical findings suggest that overall international tourism drives economic growth.

Estimation of outbound Italian tourism demand: a monthly dynamic EC-LAIDS model

An almost ideal demand system with monthly frequency, in both long-run and dynamic forms, is used to quantify the responsiveness of Italian tourism demand to changes in relative prices, exchange rates, expenditure and unexpected one-off events in four main European destinations. Short-term elasticities, which are crucial for policies regarding own price, as well as cross prices and expenditure elasticities are derived from the dynamic model. It is also found that the dynamic model outperforms the long-run model in forecasting accuracy. This paper provides useful information for policymakers to maintain high market shares of Italian tourism demand.

A Further Step into the ELGH and TLGH for Spain and Italy

Nowadays many developing countries focus on economic policies for promoting international tourism and exports expansion as a potential source of economic growth of the country. However, the understanding of the relationship between exports and economic growth is still ongoing. When treating the relationship between tourism and economic growth, considering tourism as a non-traditional export few studies have been published to date. This paper has the objective to assess if exports and tourism have really promoted growth by means of the export-led growth hypothesis (ELGH) and the tourism-led growth hypothesis (TLGH). The cases under analysis are Spain and Italy, two of the most important countries worldwide regarding the expansion of tourism. Cointegration techniques and the multivariate Granger causality test are applied. Results reveal that exports cause economic growth in the long-term for both countries, whilst only for Spain tourism appears as a factor which influences economic growth in the long-run.

Does a Common Currency Promote Countries Growth Via Trade and Tourism

The main aim of this study is to contribute to the debate on the effects of a common currency. In particular, the impact of a common currency on growth via trade and tourism is explored for a panel dataset which includes 179 countries as destination and 30 OECD countries as origin over the period 1995-2006. This research contributes to previous work in three ways: (i) tourism is included as an additional channel for a common currency to promote growth; (ii) the heterogeneity of countries is addressed by dividing the sample into three groups of countries by income; and (iii) up-to-date data including the case of the euro are considered. The results obtained suggest that a common currency strengthens economic growth by promoting not only international trade but also tourism.