Mass Beach Tourism and Economic Growth: Lessons from Tunisia

Abstract

This paper examines the relationship between tourism exports, imports of capital goods and economic growth, with special reference to Tunisia over the period 1975–2007. The dynamic interaction between these variables is examined within a vector error correction model using the Johansen technique of cointegration with structural changes and the multivariate Granger causality test. The authors consider that tourism may affect economic growth through two different channels, the TLG and TKIG mechanisms. Their findings reveal a complex picture of the relationship between these variables. There seems to be no TLG mechanism in Tunisia, while the TKIG mechanism appears as a short-run phenomenon only. In total, tourism exports have contributed significantly towards financing the country's imports of capital goods, but they have not been the principal engine of long-term growth. On the contrary, the results support the hypothesis of a growth-led tourism in this country. They also provide evidence of a strong unidirectional causality from economic growth to imports of capital goods.

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