Is the tourism-led growth hypothesis valid for Turkey?

Abstract

Like many developing countries, Turkey has also given priority to the development of tourism industry as a part of its economic growth strategy. This study intends to investigate whether tourism has really contributed to the economic growth in Turkey. The interaction between tourism and economic growth is investigated by making use of leveraged bootstrap causality tests. This method is robust to the existence of non-normality and ARCH effects. Special attention is given to the choice of the optimal lag order of the empirical model. It is found that the tourism-led growth hypothesis is supported empirically in the case of Turkey.

Notes

Sinclair (1998) argues that most of the studies have focused on estimating tourism demand and income generation via the multiplier process.

Akal (2004) draws attention to close relation between these two measures of tourism in the case of Turkey. He finds a long run relationship between tourism receipts and the tourist arrivals in Turkey. He also reports that 1% increase in the number of international tourists would increase the revenues by 0.96% in the short run and by 3.09% in the long run on the average.

Uysal and Crompton (1984) also report the significance of relative exchange rates for international tourist arrivals in Turkey.

For more details on leverage adjustment see Hacker and Hatemi-J (2003). The authors introduce this adjustment for multivariate equation cases.