The relationship between tourism revenue and economic growth: Time series evidence from Turkey

Tourism sector in Turkey, as all over the world, emerges as one of the fastest growing and developing sectors. The tourism sector is a multi-faceted sector which has social, cultural, political and environmental impacts as well as providing foreign currency inflow to the country, keeping the economy alive, reducing unemployment by creating new jobs and contributing to economic growth. The fact that the tourism sector is so important has led to numerous academic studies investigating the effects of developments in tourism sector on economic growth. When the studies in the literature are examined, it is seen that quite various results have been acquired regarding the relationship between tourism and economic growth. These studies cannot reach consensus on many aspects such as the direction of causality, the existence of its effect, and if there is any such effect, the magnitude of it. In this study, by using the annual data of the period between 1968-2014, short- and long-term dynamic relations between tourism and economic growth are analyzed. In this study, it is concluded that there exists a long term relationship between economic growth, tourism revenues, gross fixed capital formation, exchange rate and human capital. In addition, it has been demonstrated by various cointegration tests that tourism revenues contribute positively to economic growth in both short and long term. Finally, it is concluded that there is a one-way causality from tourism revenues to economic growth.