Abstract
The objective of this paper was to investigate, with respect to the case of Mexico, the relationship between international tourism and the magnitude of poverty during the period of 1980–2017, through the use of an autoregressive distributed lags (ARDL) cointegration model with a structural break. The econometric results obtained in this paper indicate that there is a long-term relationship between international tourism and the reduction of poverty. It was found that for every 1% increase in international tourism, household consumption per capita increases 0.46% (and, therefore, poverty decreases). In the short term, it was found that a 1% increase in international tourism leads to a 0.11% increase in household consumption per capita (a decrease in poverty). The coefficient of the error correction model indicates that 23.9% of any movement into disequilibrium is corrected within one year. To corroborate these results, a Toda–Yamamoto Granger causality test was carried out, indicating a unidirectional causality relationship from international tourism towards the reduction of poverty.
Highlights
Tourism is an increasingly important sector for many economies of the world, especially for developing countries
Because the order of integration is different for the two variables, it is not possible to use Johansen’s test, so we proceeded to apply the autoregressive distributed lag (ARDL) bounds testing approach to cointegration proposed by Pesaran et al [32], which can be used even if the order of integration of the variables differs, as long as it is not greater than 1 [33]
The results are, to a certain extent, congruent when compared with those obtained for the case of Mexico regarding the relationship between tourism and economic growth [3] and economic growth and poverty [26], as these authors found that larger tourism receipts lead to a higher rate of economic growth, and, in turn, as Garza-Rodriguez [26] found, higher economic growth leads to a lower poverty rate
Summary
Tourism is an increasingly important sector for many economies of the world, especially for developing countries. Due to the great and growing importance of the tourism sector in the economy and in the generation of jobs, as well as its contribution to the generation of foreign exchange, many developing countries have turned to tourism as an important instrument of growth and development. The growing importance of tourism in the economy has given rise to the tourism-led growth hypothesis (TLGH), which, in turn, is theoretically based on the export-led growth hypothesis (ELGH), which postulates that the expansion of exports is one of the main determinants of economic growth [3]. Croes [4] has pointed out that the empirical evidence shows a strong positive correlation between tourism development and economic growth
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