The Relation Between Tourism and Economic Development- A Review

Abstract

Tourism development has become one of the top priorities for many countries - due to potential economic benefits. Moreover, the causal link between tourism and economic growth has long been of interest in many studies, without a consensus on the direction of reason between these two changing factors. The key issues that have been prioritized in addressing the cause are: First, that tourism contributes to economic growth (tourism-led hall); and second, that economic growth leading to the growth of the tourism industry (a vision driven by tourism growth). In this paper, we review some of the previous studies conducted, to assess the risk between tourism industry development and economic growth in both developed and developing countries. These studies used time series data analysis, panel/data class analysis, and input/output analysis. Our environmental reviews show that the causal relationship between tourism and economic growth varies from country to country; and depends on the method used. On average, however, we find that most of the previous studies reviewed in this paper support the growth theory led by tourism.