Exports are generally assumed to promote long-term growth through two main channels. The first, known as the export-led growth (ELG) hypothesis, is by enhancing economy-wide efficiency. This mechanism has recently been applied to tourism services exports (the tourism-led growth, TLG, hypothesis). The second channel is the financing of imports of foreign capital goods, thus raising the level of capital formation. Although this channel turns out to be empirically important, no theoretical rigorous foundation has yet been provided. Moreover, it has never been investigated for tourism exports. This paper fills two gaps. On the theoretical side, it provides a clear justification of the role of capital good imports in the link between exports and overall economic growth. A model has been built to examine this so-called EKIG hypothesis (exports → capital good imports → growth) in which sustained economic growth is achieved by imports of foreign capital entirely financed through inbound tourism. This model highlights a mechanism of international transmission of economic growth from the tourist-generating country (the tourism services importer) to the tourist-receiving economy (the tourism services exporter) through trade and terms-of-trade movement without any technological progress, research and development (R&D) activity or accumulation of human capital in the host economy. On the empirical side, this study constitutes the first attempt to examine the role of tourism exports on economic growth through capital good imports. The authors use Johansen's cointegration approach and the multivariate Granger causality test to analyse the TKIG (tourism → capital good imports → growth) hypothesis in the Spanish economy.
AlamM.I. (2003), ‘Manufactured exports, capital good imports and economic growth: Experience of Mexico and Brazil’, International Economic Journal, Vol 17, No 4, pp 85–105.
2.
BachaE.L. (1990), ‘A three gap model of foreign transfers and the GDP growth rate in developing countries’, Journal of Developing Economics, Vol 32, pp 279–296.
3.
BalaguerL.Cantavella-JordáM. (2002), ‘Tourism as a long-run economic growth factor: The Spanish case’, Applied Economics, Vol 34, pp 877–884.
4.
BalassaB. (1978), ‘Exports and economic growth: Further evidence’, Journal of Development Economics, Vol 5, pp 181–189.
5.
Ben-DavidD.LoewyM.B. (1998), ‘Free-trade, growth and convergence’, Journal of Economic Growth, Vol 3, pp 143–170.
6.
BenderD.LöwensteinW. (2005), Two-Gap Models: Post-Keynesian Death and Neoclassical Rebirth, IEE Working Papers, Ruhr University Bochum, Bochum.
7.
BhagwatiJ.N. (1978), Foreign Trade Regimes and Economic Development: Anatomy and Consequences of Exchange Control Regimes, National Bureau of Economic Research, New York.
8.
GómezBote V. (1993), ‘La necesaria revalorización de la actividad turística española en una economía terciarizada e integrada en la CEE’, Revista Estudios Turísticos, Vol 118, pp 5–26.
9.
BuisánA.GordoE. (1997), El sector exterior en España, Servicio de Estudios del Banco de España, Madrid.
10.
CheneryH.B.BrunoM. (1962), ‘Development alternatives in an open economy: The case of Israel’, Economic Journal, Vol 72, pp 79–103.
11.
CheneryH.B.StroutA.M. (1966), ‘Foreign assistance and economic development’, American Economic Review, Vol 56, pp 679–733.
12.
CheungY.W.LaiK.S. (1993), ‘Finite-sample sizes of Johansen's likelihood ratio tests for cointegration’, Oxford Bulletin of Economics and Statistics, Vol 55, pp 313–328.
13.
CheungY.W.NgL.K. (1998), ‘International evidence on the stock market and aggregate economic activity’, Journal of Empirical Finance, Vol 5, pp 281–296.
14.
ChuangY.-C. (1998), ‘Learning by doing, the technology gap and growth’, International Economic Review, Vol 39, No 3, pp 697–721.
15.
CopelandB.R. (1991), ‘Tourism, welfare and de-industrialization in a small open economy’, Economica, Vol 58, No 4, pp 515–529.
16.
Cortés-JiménezI.ArtísM. (2006), ‘The role of the tourism sector in economic development. Lessons from the Spanish experience’, Documents de Treball de la Facultat de Ciències Econòmiques I Empresarials, No E06/158, Universitat de Barcelona, Barcelona.
17.
De la DehesaG.RuizJ.J.TorresA. (1991), ‘The timing and sequencing of a trade liberalization policy: The case of Spain’, in MichaelyM.ChoksiA.PapageorgiousD., eds, Liberalizing Foreign Trade, Basil Blackwell, Oxford.
18.
DickeyD.FullerW. (1979), ‘Distribution of the estimators for autoregressive time series with a unit root’, Journal of the American Statistical Association, Vol 74, pp 427–431.
19.
DritsakisN. (2004), ‘Tourism as a long-run economics growth factor: An empirical investigation for Greece using causality analysis’, Tourism Management, Vol 10, No 3, pp 305–316.
20.
EngleR.F.GrangerC.W.J. (1987), ‘Cointegration and error correction: Representation, estimation and testing’, Econometrica, Vol 55, pp 251–276.
21.
EsfahaniH.S. (1991), ‘Exports, imports and economic growth in semi-industrialized countries’, Journal of Development Economics, Vol 35, pp 93–116.
22.
EvansM.R.FoxJ.B.JohnsonR.B. (1995), ‘Identifying competitive strategies for successful tourism destination development’, Journal of Hospitality & Leisure Marketing, Vol 3, No 1, pp 37–45.
23.
FederG. (1983), ‘On exports and economic growth’, Journal of Development Economics, Vol 12, No 3, pp 59–73.
24.
FelipeJ. (2003), Is Export-Led Growth Passé? Implications for Developing Asia, Economics and Research Department Working Paper Series, Asian Development Bank, Manila.
25.
GonzaloJ. (1994), ‘Comparison of five alternative methods of estimating long run equilibrium relationship’, Journal of Econometrics, Vol 60, pp 203–233.
26.
GrangerC.W.J. (1969), ‘Investigating causal relations by econometric models and cross-spectral methods’, Econometrica, Vol 37, pp 424–438.
27.
GrangerC.W.J. (1988), ‘Some recent developments in a concept of causality’, Journal of Econometrics, Vol 39, pp 199–211.
28.
GrayH.P. (1966), ‘The demand for international travel by the United States and Canada’, International Economic Review, Vol 7, No 1, pp 83–92.
29.
GrossmanG.M.HelpmanE. (1991), Innovation and Growth in the Global Economy, MIT Press, Cambridge, MA.
30.
GunadhiH.BoeyC.K. (1986), ‘Demand elasticities of tourism in Singapore’, Tourism Management, Vol 7, No 4, pp 239–253.
31.
GunduzL.HatemiA.-J. (2005), ‘Is the tourism-led growth hypothesis valid for Turkey?’, Applied Economics Letters, Vol 12, pp 499–504.
32.
HazariB.R.NowakJ.-J. (2003), ‘Tourism, taxes and immiserization: A trade theoretic analysis’, Pacific Economic Review, Vol 8, No 3, pp 279–287.
33.
HazariB.R.NowakJ.-J.SahliM. (2003), ‘International tourism as a way of importing growth’, Proceeding of the International Conference on Tourism Modelling and Competitiveness, Paphos, Cyprus, 31 October–1 November.
34.
HerzerD.Nowak-LehmannF.SiliverstovsB. (2006), ‘Export-led growth in Chile: Assessing the role of export composition in productivity growth’, The Developing Economies, Vol XLIV, No 3, pp 306–328.
35.
JohansenS. (1988), ‘Statistical analysis of cointegration vectors’, Journal of Economic Dynamics and Control, Vol 12, pp 231–254.
36.
JohansenS. (1991), ‘Estimation and hypothesis testing of cointegrating vectors in Gaussian vector autoregressive models’, Econometrica, Vol 59, pp 1551–1580.
37.
JohansenS.JuseliusK. (1990), ‘Maximum likelihood estimation and inference on cointegration – with applications to the demand for money’, Oxford Bulletin of Economics and Statistics, Vol 52, No 2, pp 169–210.
38.
KimH.J.ChenM.JangS. (2006), ‘Tourism expansion and economic development: The case of Taiwan’, Tourism Management, Vol 27, No 5, pp 925–933.
39.
KruegerA.O. (1980), ‘Trade policy as an input to development’, American Economic Review, Vol 70, pp 188–192.
40.
KruegerA.O. (1985), ‘The experience and lessons of Asia super exporters’ in CorboV.KruegerA.O.OssaF., eds, Export-Oriented Development Strategies: The Success of Five Newly Industrialized Countries, Westview Press, London.
41.
LanzaA.PigliaruF. (1994), ‘The tourism sector in the open economy’, in NijkampP.CoccossisW., eds, Tourism and the Environment, Avebury, Aldershot.
42.
LanzaA.TempleP.UrgaG. (2003), ‘The implications of tourism specialisation in the long run: An econometric analysis for 13 OECD economies’, Tourism Management, Vol 24, pp 315–321.
43.
LevineR.ReneltD. (1992), ‘A sensitivity analysis of cross-country regressions’, American Economic Review, Vol 82, pp 942–963.
44.
LucasR.E. (1988), ‘On the mechanics of economic development’, Journal of Monetary Economics, pp 3–42.
45.
MacKinnonJ.G. (1996), ‘Numerical distribution functions for unit root and cointegration tests’, Journal of Applied Econometrics, Vol 11, pp 601–618.
46.
McKinnonR.I. (1964), ‘Foreign exchange constraints in economic development and efficient aid allocation’, Economic Journal, Vol 74, pp 388–409.
47.
MazumdarJ. (2001), ‘Imported machinery and growth in LDCs’, Journal of Development Economics, Vol 65, pp 209–224.
48.
NeweyW.WestK. (1994), ‘Automatic lag selection in covariance matrix estimation’, Review of Economic Studies, Vol 61, No 4, pp 631–653.
49.
NowakJ.-J.SahliM. (2006), ‘Tourism, capital good imports and long-run growth’, Proceedings of the Thirteenth Economic Research Forum, Kuwait, 17–19 December.
50.
OhC. (2005), ‘The contribution of tourism development to economic growth in the Korean economy’, Tourism Management, Vol 26, No 1, pp 39–44.
51.
Osterwald-LenumM. (1992), ‘A note with quintiles of the asymptotic distribution of the maximum likelihood cointegration rank test statistics: Four cases’, Oxford Bulletin of Economics and Statistics, Vol 54, pp 461–472.
52.
PadillaR. (1988), ‘La demanda de servicios turísticos en España’, Investigaciones Económicas, Vol 12, pp 461–472.
PhillipsP.C.B.PerronP. (1988), ‘Testing for a unit root in time series regression’, Biometrika, Vol 75, pp 335–346.
55.
PyeE.A.LinT.B., eds (1983), Tourism in Asia: The Economic Impact, Singapore University Press, Singapore.
56.
RiezmanR.G.WhitemanC.H.SummersP.M. (1996), ‘The engine of growth or its handmaiden? A time-series assessment of export-led growth’, Empirical Economics, Vol 21, pp 77–110.
57.
Rivera-BatizL.A.RomerP. (1991), ‘International trade with endogenous technological change’, European Economic Review, Vol 35, pp 971–1004.
58.
SimsC. (1980), ‘Macroeconomics and reality’, Econometrica, Vol 48, pp 1–48.
59.
SimsC.A.StockJ.H.WatsonM.W. (1990), ‘Inference in linear time series models with some unit roots’, Econometrica, Vol 58, pp 113–144.
60.
SinclairM.T. (1998), ‘Tourism and economic development: A survey’, The Journal of Development Studies, Vol 34, No 5, pp 1–51.
61.
SinclairM.T.GómezBote V. (1996), ‘Tourism, the Spanish economy and the balance of payments’, in BarkeM.NewtonM.TownerJ., eds, Tourism in Spain: Critical Perspectives, CAB International, Wallingford, Chapter 4.
62.
SongH.WittS.F. (2000), Tourism Demand Modelling and Forecasting: Modern Econometric Approaches, Pergamon, Oxford.
63.
SummersR.HestonA. (1991), ‘The Penn-World Table (Mark 5): An expanded set of international comparisons, 1950–1988’, Quarterly Journal of Economics, Vol 106, pp 327–368.
64.
SyriopoulosT. (1995), ‘A dynamic model of demand for Mediterranean tourism’, International Review of Applied Economics, Vol 9, No 3, pp 318–336.
65.
UysalM.CromptonJ.L. (1984), ‘Determinants of demand for international tourist flows in Turkey’, Tourism Management, Vol 5, No 4, pp 288–297.
66.
World Bank (1982), World Development Report, Washington, DC (table 2).
67.
World Bank (2004), World Development Indicators, CD-Rom.
