Exploring the effect of ICT and tourism on economic growth: a study of Israel

In this paper, we explore the impact of information and communications technology (ICT) and tourism on per worker output over the period 1960-2016 by using an augmented Solow (Quart J Econ 70(1): 65-94, 1956) framework estimated through the autoregressive distributed lag procedure for cointegration (Pesaran et al. in J Appl Econ 16(3):289-326, 2001). The results show that mobile cellular subscriptions (measure of ICT pervasiveness) and visitor arrivals as a percent of workers (measure of tourism) are cointegrated and positive, however, only ICT is statistically significant in the long-run. The long-run elasticity coefficient of ICT and tourism is 0.03 and 0.05, respectively. We note a unidirectional causality from ICT to output per worker, from tourism to output per worker, from capital per worker to tourism, and from ICT to tourism. From the results, we emphasize that focusing on technology advancement and tourism expansion will provide the necessary support for economic growth in the country.