Tourism's Contribution to Economic Growth: A Global Analysis for the First Decade of the Millennium

Abstract

The paper reviews the various methods and tourism development proxy variables used to measure the impact of tourism on economic growth. The growth decomposition methodology is employed with data for 174 countries covering 2000 to 2010 to measure the impact of tourism on a country-by-country basis. Tourism's contribution to economic growth is highest in Africa, Asia and Latin America and the Caribbean. It is slightly negative in Europe, North America and Oceania. The paper also investigates the factors that influence tourism's contribution to growth. The results show that this contribution is higher in those economies where tourism accounts for a higher share of gross domestic product (GDP). The implications and limitations of the growth decomposition methodology are also discussed.