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Tourism and Economic Growth in Latin American Countries: A Panel Data Approach

Author

Listed:
  • Juan Luis Eugenio-Martín

    (Christel DeHaan Tourism and Travel Research Institute, University of Nottingham)

  • Noelia Martín Morales

    (Departamento de Análisis Económico Aplicado, Universidad de Las Palmas de Gran Canaria)

  • Riccardo Scarpa

    (Environment Department, University of York)

Abstract
We consider the relationship between tourism and economic growth for Latin American countries since 1985 until 1998. The analysis proposed is based on a panel data approach and the Arellano-Bond estimator for dynamic panels. We obtain estimates of the relationship between economic growth and growth in tourists per capita conditional on main macroeconomic variables. We show that the tourism sector is adequate for the economic growth of medium or low-income countries, though not necessarily for developed countries. We then invert the causality direction of the analysis. Rather than explaining economic growth, we try to explain tourism arrivals conditional on GDP and other covariates such as safety, prices and education level, and investment in infrastructures. We employ a generalised least squares AR(1) panel data model. The results provide evidence that low-income countries seem to need adequate levels of infrastructures, education and development to attract tourists. Medium-income countries need high levels of social development like health services and high GDP per capita levels. Finally, the results disclose that price of the destination, in terms of exchange rate and PPP is irrelevant for tourism growth.

Suggested Citation

  • Juan Luis Eugenio-Martín & Noelia Martín Morales & Riccardo Scarpa, 2004. "Tourism and Economic Growth in Latin American Countries: A Panel Data Approach," Working Papers 2004.26, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2004.26
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Tourism; Economic growth; Panel data;
    All these keywords.

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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