Tourism and Economic Growth in Turkey

Tourism sector entails both costs and benefits to the economy. The costs are mainly emphasized as opportunity costs. On the other hand tourism revenues may have growth promoting potential benefits: It is a source for deriving foreign exchange which can be used to import capital goods for productive purposes. Thus, a rise in tourism revenues may result in higher production and employment. This paper examines empirically the effects of tourism revenues on economic growth in Turkey for the time period 1962-2002, in a VAR framework. The empirical findings indicate that even though there is growth promoting effects of tourism revenues in the long-run, there is no short-run relationship between tourism and economic growth.