Tourism Specialization, Absorptive Capacity, and Economic Growth

Abstract

This article investigates the relationship between tourism specialization and economic growth while accounting for the absorptive capacity of host (tourism destination) countries, defined in terms of financial system development. We use the system generalized methods-of-moments (SYS-GMM) estimation methodology to investigate this relationship for 129 countries over the period 1995-2011. The results support the hypothesis that the positive effect of tourism specialization on growth is contingent on the level of economic development as well as the financial system absorptive capacity of recipient economies. Consistent with the law of diminishing returns, we also find that for countries with a developed financial system, at exponential levels of tourism specialization, its effect on growth turns negative. Significant policy implications flow from these findings.

Where Can Tourism-Led Growth and Economy-Driven Tourism Growth Occur?

“… lnGDP_per, the log of GDP per capita (in 2010 prices), which represents the level of economic development (De Vita and Kyaw 2016). This variable is included in the TLG and EDTG equations to test Hypotheses 1 and 5, respectively;  lnGDP, the log of GDP (in 10,000 RMB of 2010 prices), which represents the size of the economy of each region.…”

Regime-Switching Effect of Tourism Specialization on Economic Growth in Asia Pacific Countries

“…The situation may depend on the economic development and tourism specialization of a particular country (Chou 2013;De Vita and Kyaw 2016b;Sequeire and Campo 2005;Brau et al 2007;Po and Huang 2008). indicate that there has been no consensus regarding whether tourism development has a positive or negative effect on the economic growth of a country.…”

Achieving tourist destination competitiveness: Evidence from Latin‐American and Caribbean countries

“…Panama or Chile have witnessed a growth in excess of 36%, followed by countries such as Colombia or Ecuador where, boasting more modest figures, international tourist arrivals have increased by over 25%. Destinations that until recently attracted an extremely limited type of tourist have begun to receive other kinds of visitors who travel for a variety of reasons, interested in what these locations have to offer in terms of heritage and nature, in addition to work‐related, business, or congress purposes (De Vita & Kyaw, ). Such development has sparked fierce competition among tourist destinations the world over and is reflected in stakeholder interest in ascertaining which factors drive the sector's development and power to attract tourism and can therefore enhance their competitiveness in the face of their rivals.…”

“…Panama or Chile have witnessed a growth in excess of 36%, followed by countries such as Colombia or Ecuador where, boasting more modest figures, international tourist arrivals have increased by over 25%. Destinations that until recently attracted an extremely limited type of tourist have begun to receive other kinds of visitors who travel for a variety of reasons, interested in what these locations have to offer in terms of heritage and nature, in addition to work-related, business, or congress purposes (De Vita & Kyaw, 2016).…”