AN EMPIRICAL ANALYSIS OF RELATIONSHIP BETWEEN TOURISM AND ECONOMIC GROWTH: PANEL EVIDENCE FROM WESTERN BALKAN COUNTRIES

Abstract

Tourism is one of the most important sectors in the world and it has multiplier effects due to indirect implications to a wide variety of small, service-oriented businesses. This paper aims to determine the effects of the tourism sector on economic growth in terms of tourism share, international tourism receipts and international tourism arrivals. The subject of the chapter is estimating the effects of the tourism sector on economic growth in selected Western Balkan countries such as Albania, Bosnia and Herzegovina, Montenegro, North Macedonia and Serbia for the period 2007-2018. Results of the fixed effects model show tourism sector has significant and positive impact on economic growth in these countries for the observed period. Empirical findings manifest that governments in Western Balkan countries should focus on a higher share of the tourism sector in their economy in order to provide positive implications to economic development.