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Tourism and Economic Growth in G10 Countries

This study proposes an asymmetric panel causality test to analyze the
relationship between tourist arrivals and economic growth. To this end, annual
data over the period 1995–2017 are examined for the G10 countries. The findings
demonstrate that the relationship between tourism and economic growth varies
according to positive and negative shocks. In terms of positive shocks, tourism
development causes economic growth. The study also finds a bidirectional
causality relationship between the negative shocks of the variables. Therefore,
positive developments in tourism contribute to economic growth, while negative
events in tourism impede growth. In sum, tourism is strongly linked to economic
activities in G10 countries, and thus policymakers should attach importance to
the tourism sector in order to support sustainable development.