As to have job opportunity in tourism

tourism is supposed to create one in eleven jobs worldwide (UNWTO, 2016),
questions about the relationship between tourism development and economic
growth are need to be tested. Do
tourism development cause economic growth? Does economic growth lead to tourism
development? Do these two factor affect each other in one-way causality or reinforce
each other? Various researchers have studied about this relation and conflict
results have been found.

The most popular result is a positive contribution
to economic growth of tourism, which is known as the tourism-led growth
hypothesis. Balaguer and Cantavella-Jordà (2002) first pointed out this hypothesis
in their paper of the Spanish economy. A number of studies results have
supported this tourism-led economic growth hypothesis. Du (2016) used a tourism growth-model over 109 countries and found
out that the development of tourism has a particularly positive connection to
GDP per capita because tourism contributes to the long-term growth of an
economy through its role as a standard income determinant. (Paramati S, Alam M and
Chen C, 2016)
concluded that tourism has significant positive impact to economic growth.
However, the magnitude is higher on the economic growth for the developing
nations than the developed ones. The sample countries of this study owned 84%
of the world’s total tourism income and accounted for 85% of global CO2
emissions in 2013. Therefore, governments of all countries should consider this
problem aside positive result and launch sustainable tourism policies to
protect environment. In a continent like Africa, the same result was also shown.
(Fayissa B, Nsiah C and Tadasse B, 2008) implied that tourism
enhancement can lead to economic growth of African economies in short-term. OECD
countries also experience unidirectional causality from tourism development (Lee C & Chang C,
Even small island economy like Mauritius gained much success in recovering economy
by tourism concentration (Durbarry, 2004). Furthermore,
tourism development has indirect positive effects on the economy. Fayissa, Nsiah and Tadasse (2008) provided evidence that tourism industry contributes
to investment in physical and human capital. Croes and Vanegas (2008) suggest
that tourism development allows vulnerable people to have job opportunity in
tourism services.

Best services for writing your paper according to Trustpilot

Premium Partner
From $18.00 per page
4,8 / 5
Writers Experience
Recommended Service
From $13.90 per page
4,6 / 5
Writers Experience
From $20.00 per page
4,5 / 5
Writers Experience
* All Partners were chosen among 50+ writing services by our Customer Satisfaction Team

Another conclusion of relationship between tourism
development and economic growth is economic-led growth hypothesis. Oh (2005)
claims a one-way relationship of economic-driven tourism growth in South Korea.
This model implies that economic growth increases tourism earnings. In another
word, a country will attract more tourists when its infrastructure, education,
income per capita and safety environment are improved. Tourism does not grow to
success in isolation. It depends on infrastructure that supports the movement
of goods and people. It is dependent on a skilled, creative, and
entrepreneurial labor force. A government and society having supports to attract
people both as residents and tourists also help promotes tourism. Therefore,
economic growth leads to tourism development. Other studies supporting this
point are Narayan (2004) for Fij and Tang and Jang (2009) for the United States.

A bilateral causality is also concluded in some
studies about relationship between tourism development and economic growth. Dritsakis
(2004) indicates that tourism revenues cause economic growth with a ‘strong
causal’ relationship while economic growth causes tourism revenues with a
‘simply causal’ relationship. Kim, Chen and Jang (2006) showed that although
Taiwan and South Korea have a similar economic structure, tourism and economic
development in Taiwan reinforce each other. This result is due to the
difference in size of the national economy, the level of openness of the country,
the level of travel restrictions, the
degree of dependence on tourism, tourism destination life cycle, and the level
of economic development between two countries. Bidirectional relationship also
appears in nonOECD countries (Lee C & Chang C, 2008).

relationship between tourism development and economic growth does not always
have the same effect in a country in different periods of time. Zuo and Huang
(2017) studied this relationship through different levels of tourism
specialization. Their research reveals that whether tourism generates economic
growth depends on the life cycle of the host country. In the first stage of
tourism development, tourism accelerates economic growth. However, when tourism
specialization passes its maximum contribution, the contribution of tourism to
economic growth declines and rises again when a second life cycle for the
destination starts. Tourism specialization is not merely a process featured by
increasing output of tourism products and services, but also a process with
economic structural transformation or adaptation characterized by pooled labor,
pooled enterprises, and the aggregation of intermediate suppliers and
supporting institutions. It should be measured by two aspects: capability and
quality. Therefore, the level of tourism contributing to economic growth varies
in different tourism areas life cycle stages.

conclusion, whether the correlation
between tourism development and economic growth is one-way causality, bilateral
causality or neutrality depends on the feature of each country such as economic
structure and tourism resource. Governments should determine which type of the
above relationship belong to their countries to develop suitable strategy for a
sustainable economic growth.