The Relation between International Tourism and Economic Growth

Abstract

Having recognized the importance of tourism to economic growth, many researchers have started to argue that tourism growth can also influence the economy and tourism. This paper attempts to test the long-run and short-run relationships between international tourism and Iran’s economic growth by accommodating structural breaks and Bayer and Hanks cointegration test and using the Autoregressive Distributed Lag (ARDL) and Granger Causality to examine the relationships between investment in physical capital and human capital and household consumption expenditures over the period of 1980-2014. The main finding of this study is the TLG hypothesis can be accepted in Iran. The more the country prospers the more stable and sounds are the economic, social and political situations. The prospective tourists will have more confidence to visit Iran. Keywords: