Tourism and Economic Growth Nexus in Latin America and Caribbean Countries: Evidence from an Autoregressive Distributed Lag Panel
Abstract
This research focuses on tourism as a way to stimulate economic growth in Latin America and the Caribbean countries. The impact of tourism on economic growth was expected to have both short- and long-run effects. Panel autoregressive distributed lag, an econometric technique that allows for this temporal decomposition, was used. The results for the twenty-two countries revealed that, in the short-run, tourist capital investment per capita, tourist arrivals (number of persons), per capita electricity consumption, and the real exchange rate were statistically significant and had a positive impact on economic growth. In contrast, in the long-run, only tourist arrivals and per capita electricity consumption proved to be positive drivers of per capita economic growth. Policymakers should continue to develop and implement measures to attract as many tourists as possible while promoting investment in the tourism industry. However, they also need to pay attention to other economic sectors so that their countries do not become extremely dependent on tourism activity.
Keywords: capital investment, tourism arrivals, economic growth, Latin America and Caribbean, ardl
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