Short-Term and Long-Term Effects of International Tourism Development on the Economic Growth of Mediterranean Countries

Abstract

The research presented in this paper aims to examine the shortterm and long-term effects of international tourism on the economic growth of 17 Mediterranean countries in the period 2000 to 2019. The impact of tourism is not analysed separately. Actually, the indicators of the countries’ labour potential, annual investments, openness to total foreign trade and inflation are also included in the analysis. A panel autoregressive distributed lag (ARDL) evaluation model along with pooled mean group (PMG) estimator was used which proved to be appropriate, based on the characteristics of the panel data series. Our research has shown that the share of international tourism receipts in total exports of a country does not have a statistically significant positive short-term effect on GDP per capita growth, but that it has a statistically significant positive effect in the first lag and a positive long-term effect. Therefore, the hypothesis stating that international tourism receipts have statistically significant short-term and long-term effects on economic growth can be rejected. Our research has shown that economic growth, as a dependent variable, returns to a long-term equilibrium after changing a selected set of independent variables in just over a year. It is vital to note that the size of long-term coefficients obtained by applying the selected model indicates that economic growth is more sensitive to the changes in the share of international tourism in total exports compared to other selected independent variables.