Abstract
The study examines tourism-led growth hypothesis in the Middle East. A panel gross domestic product (GDP) model is used taking the period of 1985–2012. The results from the Pedroni cointegration test indicated that tourism receipt (TR) is cointegrated with GDP growth (GDP). The dynamic ordinary least-squares test results revealed that TR has a positive long-run effect on GDP in the investigated countries. Moreover, the results from the Granger causality test showed that TR has a positive causal relationship with GDP. Moreover, the results also concluded that the increase in GDP, total trade, and the depreciation of the local currency are essential to promote tourism expansion. From the results, a number of recommendations were provided to increase the tourism expansion of the examined countries.
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