Tourism's Contribution to Economic Growth: A Global Analysis for the First Decade of the Millenium

Abstract

The paper reviews the various methods and tourism development proxy variables used to measure the impact of tourism on economic growth. The growth decomposition methodology is employed with data for 174 countries for the years 2000-2010 to measure the impact of tourism on a country-by-country basis. Tourism’s contribution to economic growth is highest in Africa, Asia and Latin America and the Caribbean. It is slightly negative in Europe, North America and Oceania. The paper also investigates the factors that influence tourism’s contribution to growth. Results show that tourism’s contribution to growth is higher in economies with higher share of tourism in GDP. The implications and limitations of the growth decomposition methodology are also discussed.

Keywords: economic growth, tourism, economic impact, GDP, economic growth decomposition, tourism impact on economic growth