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On the relationship between tourism and growth in Latin America
Stefania Lionetti and Oscar Gonzalez
Tourism and Hospitality Research
Vol. 12, No. 1 (JANUARY 2012), pp. 15-24
Published by: Sage Publications, Ltd.
Stable URL: http://www.jstor.org/stable/43498706
Page Count: 10
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In many countries, tourism is used as a strategy to achieve greater economic performance. The potential economic benefits are increased income, both directly and as a result of the multiplier effects of tourism revenues (particularly the informal sector), earnings of foreign exchange, new employment opportunities, access to foreign direct investment and economic diversification (Markandya A, Taylor T and Pedroso S (2005) Tourism and sustainable development: Lessons from recent World Bank experience. In: Lanza A, Markandya A and Francesco P (eds.) The Economics of Tourism and Sustainable Development. Fondazione Eni Enrico Mattei Series on Economics and the Environment. Cheltenham and Northampton, MA: Elgar., 225-251.; Nowak J-F and Sahli M (2007) Coastal tourism and "Dutch disease" in a small tourism economy. Tourism Economics 13(1): 49-65.). Among the costs that investment in tourism may arise we find: inflationary pressure due to tourist demand, costs of infrastructure development and leakages to international investors or corporations. In particular, togrism specialization can help to explain the observed high growth rates of small island's economies. While there is little literature that focus on the relationship between tourism and economic growth, and the associated evidence is conflicting, in the economics literature, the causal relationship between trade and growth is well established. Openness fosters growth through a number of channels, including improved resources allocation, higher degree of competition, rapid acquisition of knowledge and innovation and lower levels of rent-seeking and corruption (Winters, 2007). Thus, this paper investigates the relationship between tourism and trade in order to determine the contribution of the tourism sector to the economic growth of Latin America and the Caribbean. Specifically, it uses cointegration and vector autoregressive techniques for testing the short/long-run relationship between tourism and trade. Due to the lack of systematic data in the area, six countries have been selected and analyzed: specifically, Argentina, Dominican Republic, Mexico, Nicaragua, Chile and Venezuela. Moreover, this study uses unadjusted seasonal data, thus considering possible unit roots at different frequencies.
Tourism and Hospitality Research © 2012 Sage Publications, Ltd.