Interactions between Tourism, Services Trade and Economic Growth

The aim of this thesis is to search the role of services trade and tourism in economic growth. For this purpose, thesis is divided in three sections: the first section focuses on the role of services trade and tourism in economic growth of Turkey using time series analysis. Results confirm the long-term effects of tourism and trade in economic growth. The effects of tourism and trade sectors in economic growth are inelastic but positively significant. Results do also confirm that tourism and trade sectors are the promoters for macroeconomic activity; and foreign trade as control variable is also a promoter for international tourism in Turkey. Real exchange rates have been found as successful mediators between tourism, trade and growth; thus, this raises the importance of exchange rate policies in Turkey. Finally, a result of this study has raised the reality of import dependency of tourism development in Turkey which might contradict with exchange rate policies of the Turkish Central bank. In the second section, the role of oil price changes in the effects of services trade and tourism on real income growth in Turkey is examined. Time series analysis using the 1960-2017 annual period has been adapted with this respect. Results confirm the long-term impacts of tourism and services trade sectors on real income growth in Turkey. Tourism and trade (both services and manufacturing) exerts positively significant effects on the long-term performance of macroeconomic activity as measured by gross domestic product. Oil prices negatively impact on real income growth of Turkey. It is also found that oil prices negatively moderate the effects of foreign trade, services trade, and tourism on real income growth in Turkey. This finding reveals that significant effects of foreign trade, services trade, and tourism on real income are negatively influenced from oil price changes. In the third section, the focus is to search the role of services trade and tourism in real income growth of the European Union (EU) countries using panel data analysis. Results confirm the long-term effects of tourism and trade on economic growth. The effects of services trade on income levels are elastic and positively significant while the effects of tourism expansion are inelastic and of mixed outcomes as far as its sign of coefficients and significance are concerned. Results do not also show uniformity between panel and time series estimations of this nexus. Keywords: Tourism; Growth; Oil Prices; Services Trade; European Union; Turkey.