Abstract:

Tourism-led growth hypothesis has been researched by several domestic and international studies. However, there is no consensus on the results of these studies since different countries with different data and different approaches are used for each of them. In this study, the long-run relationship between tourism and economic growth for Turkey and Turkish Republic of Northern Cyprus were researched by using annual data of tourism income and GDP between 1977 and 2013, and the role and strength of tourism sector in economic growth for both countries are investigated. ARDL bounds test are used for this study. According to the results, for Turkey, both short and long term relationships between tourism revenues and GDP are found, and there is also a unidirectional causality relationship from tourism revenues to GDP. The results also indicate that tourism-led growth hypothesis is valid, and the policies targeting development of tourism sector are efficient in both short and long term for Turkey. However, when the relationship between tourism revenues and GDP for TRNC is tested, co-integration relationship cannot be found between these two variables so, we can conclude that tourism-led growth hypothesis is not valid for TRNC.

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