International Tourism and Economic Development in Turkey: A Vector Approach

Being a developing country, Turkey is endeavoring to achieve sustained economic growth. An important tool Turkey uses for sustained economic growth is that of international tourism earnings. In turn higher real income of the country attracts more tourists and leads to higher tourism earnings as well. The direction of causality between income and tourism earnings is tested for Turkey with the help of other variables; those of real export volume and real exchange rate in a multivariate vector autoregressive model. Quarterly data from 1980 to 2011 is (are) used and tourism earnings are shown to be an essential contributor to the real GDP of the country. After the elections in 2002, a more assertive party as regards their setting of tourism targets of international scale came into power. The effects of this new aggressive tourism strategy of the government, and this relationship with the tourism sector are studied for the first time in the literature

Keywords:

tourism earnings, economic development, Turkey, VECM Granger causality test,

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Unrestricted Cointegration Rank Test (Maximum Eigenvalue) Prob.** Eigenvalue Statistic 467072 52.09762 334785 26.92288 174035 10.61708 071537 2.968976 3. 3.841466 0.0849 0.071537 2.968976 3.841466 0.0849 49471 0.2362 0.174035 7.648107 14.26460 0.4156 At most 2 At most 3
Trace test indicates 1 cointegrating eqn(s) at the 0.05 level * denotes rejection of the hypothesis at the 0.05 level **MacKinnon-Haug-Michelis (1999) p-values
Vector Error Correction Estimates LGDP 0.025510 (0.05470) 0.46639] 2.11805] 4.12018] 19441]
Cointegrating equations Included observations: 124 after adjustments Standard errors in ( ) & t-statistics in [ ]