Empirical Assessment of the Tourism-Led Growth Hypothesis: The Case of the Tirol—Südtirol—Trentino Europaregion

Abstract

Cointegration tests have become very popular in empirical analyses of the tourism-led growth hypothesis (TLGH). They were first introduced into the literature on tourism economics by Balaguer and Cantavella-Jordá, and then were made popular by many researchers attempting to assess the causal long-run relationship between international tourism and economic growth. The vast majority of these studies analyse countries in which tourism is one of the most important sectors of the national economy and, in most cases, the TLGH is validated. With respect to previous contributions to the literature, this paper examines the TLGH in sub-national trans-frontier economies, taking as its case the three administrative areas forming the region known as ‘Tirol–Südtirol–Trentino Europaregion’. Direct comparisons with the results for across-the-border regions that have similar international tourism markets provide new insights for our understanding of the TLGH.