The Tourism-Led-Growth Hypothesis for Uruguay

Abstract

This short paper analyses the effects in the long-run of tourism on the economic growth of Uruguay. Using quarterly data from 1987.I to 2006.IV, the study uses cointegration analysis and shows the existence of a cointegrated vector among Uruguayan real per capita GDP, Argentinean tourism expenditure (the principal source of tourism in Uruguay), and real exchange rate between Uruguay and Argentina. We also show that the causality relationship goes positively in one way from Argentinean tourism expenditure to real per capita GDP of Uruguay. Finally, we compare our study with similar papers also investigating the TLGH.

Keywords: economic growth, tourism earnings, Johansen cointegration test, Granger causality

JEL Classification: C22, E01, F43, L83, O54