Tourism as an Economic Growth Factor: A Case Study for Southern European Countries

Abstract

This paper examines the importance of tourism as a conditioning factor for improving the host population's standard of living. In so doing, the well-known conditional convergence approach of Barro and Sala-i-Martin is used to test for convergence in per capita income among four Southern European countries (Greece, Italy, Portugal and Spain), each with a long tradition as a tourist destination. The empirical analysis uses panel data techniques to estimate growth equations, combining time-series and cross-sectional data for the four countries, from 1990 to 2004. The results indicate that tourism contributes significantly to the improvement of the standard of living in these countries and acts as a factor of convergence.