Revisiting tourism’s additional impact on income

Abstract

This study revisits the question of whether tourism development is an additional determinant of income or works through other standard income determinants. Both a panel data analysis from 2006 to 2015 and a cross-sectional country average analysis reveal that the incremental effect of tourism is significantly positive, suggesting that tourism is an additional determinant of income. Further analyses show that the income effect of tourism is contingent on some country characteristics: the positive income effect of tourism mainly appears in countries with weak policies or institutions for environmental sustainability or with better quality of overall infrastructure. These findings help enhance the understanding of the significant contribution of international tourism to the economic growth worldwide. The implication is that the governments of destination countries should fully support tourism development.