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Tourism and Economic Growth: An Evidence for Latin American and Caribbean Countries

Purpose – The paper aims to estimate the impact of international tourism growth on economic growth in Latin American and Caribbean countries (LAC) from 2000 until 2014. These countries are illustrative ones for developing countries since they are emerging economies that have experienced an important economic development and international tourism growth over past decade. Methodology – The empirical analysis is based on panel data. The dynamic panel data model has been estimated using Blundell-Bond estimator. The dependent variable is economic growth per capita. Together with tourism growth per capita as independent variable other economic variables that represent traditional factors of economic growth were included in the model. Findings – The results provide evidence that tourism growth is valuable (positive) factor of economic growth in LAC. International tourism is recognized as equal determinant of economic growth as other traditional economic determinants of economic growth. To clarify, the results reveal that variables such as gross investment, government consumption, trade openness, human capital and political stability have significant and mainly positive effects on economic growth in LAC. The results also suggest that governments of LAC countries should focus on economic policies to promote tourism as a potential source of economic growth. Contribution – The results contribute to the existing, well-documented, economic literature which supports the positive effects of international tourism on economic growth. In addition, results reveal that for developing countries, such as LAC, it is important not to disregard other determinants of economic growth besides tourism

economic growth ; tourism growth ; panel data ; Blundell-Bond estimator

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