Tourism and economic growth relationship: Panel data analysis on upper-middle income countries

Tourism is regarded as an important industry in economic development and growth due to its broad contributions to employment, balance of payments and other sectors like transportation. This study aims to examine the relationship between tourism and economic growth using econometric analysis and to obtain numerical relationships between variables. It is common to observe that studies examining the relationship between tourism and economic growth in the literature mostly focus on single country employing methods such as time series analysis. On the other hand, when the recent studies using panel data analysis are examined in the literature, it is seen that developed and developing countries are included simultaneously in the analysis. However, when examining the long-term relationship between tourism activities and economic growth, evaluating countries with similar income levels will be beneficial to obtain more consistent and comparative results. For this reason, this study uses panel data of upper-middle-income developing countries that have similar income levels to Turkey. As a result of the panel cointegration tests conducted for the upper-middle-income emerging country group, the presence of a long-term and two-way positive relationship was detected between tourism income and economic growth as well as between the number of international tourism arrivals and economic growth.