NET ULUSLARARASI TURİZM GELİRLERİ VE GSYİH: KÜMÜLATİF TOPLAMLAR YAKLAŞIMI

NET INTERNATIONAL TOURISM REVENUES AND GDP: A CUMULATIVE SUMS APPROACH

Extended Abstract

Introduction

Developing countries need a significant amount of foreign currency inflows to stabilize their economic growth, while it is accepted that short- and long-term economic policy implementations are crucial to provide the needed foreign currency for those countries. The compulsory imports of developing countries can be reduced in the long run; this is related to the increase in the foreign competitiveness level. Increasing exports can become the priority of long-term economic policies, and thus it is important to increase the total factor productivity in the real sector. According to the export-led growth hypothesis, it is assumed that the development of the export sector in developing countries will contribute to the decrease in the foreign currency demand and sustain the macroeconomic stability. Along with exports, tourism is a crucial sector that provides the needed foreign currency for developing countries. Similar to the export-led growth hypothesis, it is assumed that a country will increase its foreign exchange reserve and its economic growth as a result of the development of the tourism sector. This phenomenon refers to the tourism-led growth hypothesis; hence, it can be inferred that economic policies can be used as a tool for the development of the tourism sector in developing countries. In terms of the analysis of the tourism-led growth hypothesis, it is important to determine which tourism indicator will be used to analyze the relationship between tourism and economic growth. Since it has been acknowledged that tourism investments are generally related to inbound tourism activity in Turkey, we included the net international tourism revenues as a proxy and examined the impacts on the GDP.

Methodology

In terms of the tourism-led growth hypothesis, it has been suggested that an increase/decrease in net tourism activity will increase/decrease economic growth. In this framework, the relevant hypothesis also includes the possibility that the effects of an increase/decrease in net tourism activity on economic growth may be different. Moreover, the same effects cannot be observed in terms of the absolute value of the increase/decrease in net tourism activity. This situation refers to asymmetry in the econometric terminology, and the tourism-led growth hypothesis can be assessed in this context. In this study, the relationship between net tourism revenues and economic growth in Turkey was examined through causality analysis, including the role of asymmetry. In this respect, two types of causality test were conducted, both of which were based on the vector autoregression (VAR) models. The traditional Granger causality tests were performed through the inclusion of variables derived according to the cumulative sums approach of Hatemi-J and El-Khatib (2016), while Hatemi-J (2012) causality tests were also undertaken to analyze the relationship between the net international tourism revenues and the GDP in Turkey. Because the cumulative sums approach was adopted, asymmetric effects between the net international tourism revenues and the GDP were explored within the traditional Granger causality analysis. Asymmetric effects were also considered by the non-linear causality test, and thus Hatemi-J (2012) causality tests were employed. The aims of the study were twofold: (i) to determine the impact of the net international tourism revenues on the GDP in Turkey and make inferences about the consistency of the tourism-led growth hypothesis; and (ii) to examine the impacts of the GDP on the net international tourism revenues and thus make implications about the income elasticity of net international tourism activity. Furthermore, the differences in the results between the two tests were compared within the context of economic policy implications.

Results

The traditional Granger and Hatemi-J (2012) causality tests were generally in line with the tourism-led growth hypothesis. Accordingly, it was revealed that an increase in the net international tourism revenues would not be the reason for the decline in the GDP; it was also confirmed that the sustainability of the demand for inbound tourism to Turkey would positively influence the GDP growth in the following periods. Since the cumulative negative sums approach was adopted in the study, the effects of a decline in the net international tourism revenues on GDP growth were also studied. As a result of the traditional Granger and Hatemi-J (2012) causality tests, the hypothesis that the decline in net tourism revenues could not have been the reason for the fall in the GDP was not rejected. Those findings showed the consistency of the tourism-led growth hypothesis for Turkey, and it can be asserted that economic policies should focus on the development of international  tourism. Thus, it is critical for policy makers to identify the channels through which international tourism activity influences the GDP in Turkey. Particularly, inbound tourism can increase consumption expenditures, while they can also constitute a base for new investments in the sector. On the other hand, the possible impacts of GDP changes on the net international tourism revenues were assessed in terms of causality analysis via both tests in this study. Accordingly, the possible impacts of income elasticity on outbound tourism were implied along with the indirect effects of the GDP on inbound tourism. The traditional Granger and Hatemi-J (2012) causality tests pointed out that an increase in the GDP would not be the reason for an increase in the net international tourism revenues in the following periods. In terms of the hypothesis that an increase in the GDP reduces the net international tourism revenues, the two tests produced contrasting results. The traditional Granger and Hatemi-J (2012) causality analysis results did not verify the high-income elasticity of outbound tourism in Turkey; moreover, it can be put forward that habit behavior is critical for the outbound tourism demand.

Conclusion and Discussion

According to the findings of our study, it can be suggested that a decrease in inbound tourism activity and an increase in outbound tourism activity will negatively affect the GDP and deepen the problem of unemployment in the tourism sector. The results of this study emphasize the development of the Turkish tourism sector with the help of international tourism revenues. Thus, our findings reveal that policies to ensure tourism development and promote new investments in the sector are important factors for the validity of the tourismbased growth hypothesis. In terms of new investments, making the most accurate forecasts of the inbound tourism demand is of the utmost importance. Otherwise, the enterprises in the tourism sector of Turkey could be opposed to taking on excess debt. In this respect, we can assert that the inability to manage currency and interest rate risks, which are mainly due to borrowing to finance tourism investments, may disrupt the stability of the banking sector and even increase the inter-sectoral contagion effects on other sectors. Herein, increasing the diversification of the demand for inbound tourism to Turkey is a factor that could prevent a crisis in the tourism sector.

Kırklareli Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi (ISSN: 2146-3417 / E-ISSN: 2587-2052) Yıl: 2018 – Cilt: 7 – Sayı: 3