The significant impact of international tourism in stimulating economic growth is especially
important from a policy perspective. For this reason, the relationship between international
tourism and economic growth would seem to be an interesting and topical empirical issue. The
purpose of this paper is to investigate whether tourism specialization is important for economic
development in 159 countries over the period 1989-2008. The results from panel threshold
regressions show a positive relationship between economic growth and tourism. Instrumental
variable estimation of a threshold regression is used to quantify the contributions of tourism
specialization to economic growth, while correcting for endogeneity between the regressors and
error term. The significant impact of tourism specialization on economic growth in most
regressions is robust to different specifications of tourism specialization, as well as to differences
in real GDP measurement. However, the coefficients of the tourism specialization variables in
the two regimes are significantly different, with a higher impact of tourism on economic growth
found in the low regime. These findings do not change with changes in the threshold variables.
The empirical results suggest that tourism growth does not always lead to substantial economic
growth.
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