Abstract
Investigation of the Relationship between Tourism Activities and Economic Growth and Income Inequality: The Example of Developed and Developing Countries
Tourism positively affects economic growth through various channels. Among these channels, many other benefits can be listed, such as providing foreign exchange financing that countries need, catalyzing technological developments and innovations, increasing competitiveness and supporting employment. Besides economic growth, another factor closely related to tourism is income inequality. Income inequality is seen as an important socio-economic problem, especially in developing countries, and it is considered to be a top policy goal by policy practitioners and governments. In this study, the triple relationship between tourism and economic growth and income inequality has been examined. In other words, this study aims to determine the effects of tourism on economic growth and income inequality as well as the effect of economic growth on income inequality. For this purpose, the period between 2003-2018 of developed and developing countries has been analyzed by the System-GMM method. The results show that tourism revenues positively affect economic growth and income inequality. Accordingly, international tourism activities and the resulting increase in revenues stimulated economic growth in the study sample. This finding supported the tourism-based growth hypothesis. At the same time, the increase in tourism revenues worsens income inequality. This finding somewhat supported Kuznets curve. Besides, the effect of economic growth on income inequality is positive and significant. According to this finding, which confirms Kuznets curve, income inequality increased as economic growth increased.
Keywords
Tourism, Economic Growth, Income Inequality, System-GMM.
