Tourism and Economic Growth: Evidence from Cross-Country Data with Policy Insights

This work analyzes whether tourism development affects the economic growth. Using yearly data of 1995-2017 for the sample of 35 countries, the empirical findings reveal that tourism arrivals and tourism receipts stimulate the economic growth. Similarly, renewable and non-renewable energy consumption enhance economic growth in the selected countries. Further, human capital positively affects economic growth in case of developed countries, African, and European regions. However, the coefficients of human capital are negative on economic growth in case of aggregate panel as well as for developing countries, Asian and Latin American regions. The pairwise causality test performed mixed results in case of direction of causality. Notwithstanding, the empirical outcomes vary across various subpanels. Thus, policy should focus on enhancing cognitive skills, knowledge, high-quality educational infrastructure, and increasing school enrolment which are key to achieve higher economic growth in developing countries, Asian and Latin American regions. Moreover, for sustainable economic growth, use of more renewable energy with protective environmental quality is a win-win position in the long run.