Tourism as a factor of long-run economic growth: An empirical analysis for Chile

(ProQuest: ... denotes formula omitted.)IntroductionThe beliefs that exports can cause long-run economic growth are known in the literature as the Export Led Growth Hypothesis (ELGH). There are many studies investigating empirically the ELGH, but overall conclusions are mixed and contradictory. In many countries, foreign currency receipts from tourism exceeded receipts from all other sectors. Some authors (Shan and Wilson (2001) and references therein) have recently proposed the tourism-led growth hypothesis (TLGH) that sustains that international tourism is a strategic factor for long-run economic growth. As in the ELGH, international tourism is recognized to have a positive effect on the increase of long-run economic growth through different channels. First, tourism is a significant foreign exchange earner contributing to capital goods that can be used in the production process. Second, tourism has an important role in stimulating investments in a new infrastructure and competition. Third, tourism stimulates other economic industries by direct, indirect and induced effects. Fourth, tourism contributes to generate employment and to increase income. Five, tourism causes positive economies to scale. Finally, tourism is an important diffusion factor of technical knowledge, stimulation of research and development and accumulation of human capital.Most research in tourism has been focused on demand modeling (see Song et al. (2000), Li et al. (2005), and Song and Li (2008)). Research in the TLGH is very recent and results of the impact of international tourism to the long run economic growth are still inconclusive. Balaguer and Cantavella (2002) examine the role of tourism in the long run economic growth of Spain, confirming the validity of the TLGH in this case. Cortes- Jimenez and Pulina (2006) investigated the TLGH for Spain and Italy by using cointegration techniques and multivariate Granger causality test. They show that exports cause growth in the long run for both countries, whilst only for Spain tourism appears as a factor which influences long-run economic growth. Dritsakis (2004) investigated the impact of tourism on the long-term economic growth of Greece by using causality analysis and found evidence of bidirectional causality between international tourism and economic growth in the case of this country. Gunduz and Hatemi-J (2005) empirically confirmed the TLGH in the case of Turkey using the leveraged bootstrap causality tests. They found unidirectional causality running from international tourist arrivals to economic growth of Turkey. Ongan and Demiroz (2005) also examined the impact of tourism on the long-term economic growth of Turkey by using cointegration and Granger causality testing. They found bidirectional causality between tourism and economic growth of Turkey in both the short and the long-run. By the contrary, Katircioglu (2009) does not find any cointegration between international tourism and long-term economic growth in Turkey, rejecting the TLGH for the Turkish economy. Using cointegration and causality tests, Durbarry, R. (2004), Louca (2006), Noriko and Motosugu (2007), and Gani (1998) present support for the validity of TLGH for some small islands including Mauritius, Cyprus, Amami islands in Japan, South Pacific islands. Oh (2005) investigates the TLGH for Korea, showing that there is no long-run equilibrium relation between the variables and a one-way causal relationship of economic-driven tourism growth. Kim et al. (2006) examines the TLGH for Taiwan supporting a long-run equilibrium relationship and a bi-directional causality between the two factors. In other words, in Taiwan, tourism and economic development reinforce each other. Similarly, Proenca and Soukiazis (2005) provides evidence of the positive impact of tourism (through the accommodation capacity) on the growth in per-capita income among the Portuguese regions, Shan and Wilson (2001) investigate the causality relationships between international tourism and international trade flows using the case of China. …