Abstract
This paper empirically investigates the direct and indirect effects of tourism activity on economic growth in China's four major tourist cities with world cultural and natural heritage sites. Based on the resource curse hypothesis approach, we calculate the indirect effects of tourism on economic growth through four main transmission channels: Dutch disease effect, crowding out effect, price volatility and institutional quality. Empirical evidence from four major tourist cities from 2000 to 2010 suggests that heavy dependence on tourism resources appears to lead to Dutch disease effect; however, the effect is small and insignificant in the short term. The empirical results show that physical investment and human capital are important transmission channels through which tourism activity indirectly exerts more positive effects on economic growth. The prices volatility and economic openness play a positive but small and insignificant role in explaining tourism's indirect effect.
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