The Threshold Effects of the Tourism-Led Growth Hypothesis: Evidence from a Cross-sectional Model

Abstract

This study applies a threshold regression model and considers three tourism specialization indices as the threshold variables in order to explore the nonlinear relation among tourism growth, economic growth, and other macroeconomic variables for a cross-sectional data set of 84 countries. Our empirical results show strong evidence of a nonlinear relation between tourism growth and economic growth, suggesting that it is not continuous and constant. The results do not support the view that one size fits all, and therefore countries with different conditions of tourism development experience various impacts on the tourism–growth nexus.