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The aim of this mini review is to evaluate the
study of A review of Hasan Gül and Mustafa Özer’s paper of ‘An Analysis of
Tourism and Economic Activity in Turkey’. In the study, the authors analyses
the dynamic relationships between real Gross Domestic Product (GDP), the real
exchange rate (RER) and real tourism income (TOTREC) in Turkey over the period
from 2003: Q1 to 2014: Q4 by using frequency domain causality approach
developed by Breitung and Candelon. According to major findings of the study,
there is a causality from the real GDP Granger causes real tourism income both
in the short-and long-run, which are both transitory and permanent
(economic-driven tourism growth hypothesis-EDTG), while real tourism income
only Granger causes real GDP in the short run, which is transitory (tourism-led
economic growth hypothesis-TLEG). Also, they indicate that there is no Granger
causality neither between real tourism income and real exchange rate nor
between real GDP and the real exchange rate.
Keywords: Frequency
Domain Granger Causality, Time Domain Causality, Real Tourism Incomes.
INTRODUCTION
The study includes
a literature review including the some of the well-known studies related to
topic of paper. Lots of important studies related to the relationship between
real GDP, real tourism receipts and Real exchange rate. For example, Pavlic et
al. (2015) who stated that if tourism growth has some positive effects on GDP,
employment, foreign exchange earnings and government revenues, defined as
Tourism-Led Growth Hypothesis (TLGH). Among the supporters of TLGH, there is
among others Balaguer & Cantavella-Jorda (2002); Dritsakis (2004); Durbarry
(2004); Brida, Sanchez Carrera & Risso (2008); Brida, Pereyra & Devesa
(2008); Akinboade & Braimoh (2010); Belloumi (2010); Katircoglu (2010);
Cortes-Jimenez & Pulina (2010); Schubert et al. (2011); Li et al. (2013);
Ridderstaat et al. (2014); Kumar (2014); Tang & Tan (2015); Oh (2005);
Katircioglu (2009); Jackman & Lorde (2010); Kasimati (2011); Ghosh (2011)
and Kumar & Kumar (2012) rejected the TLGH because they found that economic
expansion affects tourism growth in some countries.
None of the study included in the literature review do not provide any
evidences of how the causal relations among these variables are subject to
change at different frequencies. Thus, the study is the first study providing
empirical evidences of nature of the causal relations among variables: whether
they are transitory of permanent. In other words, the article is a good example
of explaining the short, medium and long-run co-movements between tourism and
economic activity by using frequency domain causality analysis which is a quite
new approach in this type of study.
DISCUSSION
According to the findings of study, the real GDP Granger causes real tourism income both in the short-and long-run. These results support the predictions of economic-driven tourism growth hypothesis-EDTG. On the other hand, the real tourism income only Granger causes real GDP in the short run, which supports the tourism-led economic growth hypothesis-TLEG. When we combine both results, unlike the expectations, the effect of real GDP on real tourism income is permanent; but, the effect of real tourism income on real GDP is transitory. Thus, it is hard to argue that real tourism incomes are permanent source of growth in Turkey. One of the interesting results of the study is that there is no Granger causality neither between real tourism income and real exchange rate nor between real GDP and real exchange rate. Therefore, the role of real exchange rate stimulating the international tourism demand seems to be not important. Based on the results of study, it seems that there is an urgent need to develop and implement new tourism policies so that the sector’s contribution to economic growth can be extended to long-run. Also, the role of real exchange rate should be questioned along these new policies.
CONCLUSION
First
of all, the employing the novel approach of frequency domain causality test,
the study contributes to our understanding of causal relations among real GDP,
real tourism income and real exchange rate. The study does this in two respects.
The first and most importantly, based on the results of study, now we will have
an evidences of nature of the causal relations: whether they are transitory or
permanent. Secondly, by providing these evidences, the study solves the one of
the major problems of previous studies which uses time domain causality test,
which provides one shot of the relations. The study is also making a
contribution to our understanding of relations among the variables, by
providing evidences that the contribution of the tourism sector to the economy
of Turkey is not deniable. But, the study also provides evidences that this
contribution is short-lived. This is one of the most important results of the
study that the policy makers, sector representatives and academic should focus
on.
The
study can be extended searching the reasons of poor relations between real
exchange rate and real tourism income. Also, I think we have enough evidences
to question the importance of tourism sector in Turkey’s development by
comparing its contribution and its costs.
Akinboade,
O.A. & Braimoh, L.A. (2010). International tourism and economic development
in South Africa: A Granger causality test. International
Journal of Tourism Research, 12(2), 149-163.
Dritsakis,
N. (2004). Tourism as a long-run economic growth factor: An empirical
investigation for Greece using causality analysis. Tourism Economics, 10(3), 305-316.
Granger,
C.W. (1969). Investigating causal relations by econometric models and
cross-spectral methods. Econometrica:
Journal of the Econometric Society, 424-438.
Liu,
S. & Molenaar, P. (2016). Testing for Granger causality in the frequency
domain: A phase resampling method. Multivariate
Behavioral Research, 51(1), 53-66.
Jackman,
M. & Lorde, T. (2010). On the relationship between tourist flows and
household expenditure in Barbados: A dynamic OLS approach. Economics Bulletin, 30(1), 472-481.
Oh,
C.O. (2005). The contribution of tourism development to economic growth in the
Korean economy. Tourism Management, 26(1),
39-44.
Kasimati,
E. (2011). Economic impact of tourism on Greece’s economy: Co-integration and
causality analysis. International
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Katircioglu,
S.T. (2009). Revisiting the tourism-led-growth hypothesis for Turkey using the
bounds test and Johansen approach for co-integration. Tourism Management, 30(1), 17-20.
Katircioglu,
S.T. (2010). International tourism, higher education and economic growth: The
case of North Cyprus. The World Economy,
33(12), 1955-1972.
Pavlic,
I., Svilokos, T. & Tolic, M.S. (2015). Tourism, real effective exchange
rate and economic growth: Empirical evidence for Croatia. International Journal of Tourism Research, 17(3), 282-291.
Kumar,
R.R. (2014). Exploring the nexus between tourism, remittances and growth in
Kenya. Quality & Quantity, 48(3),
1573-1588.
Kumar,
R.R. & Kumar, R. (2012). Exploring the nexus between information and
communications technology, tourism and growth in Fiji. Tourism Economics, 18(2), 359-371.
Kumar,
R.R. & Stauvermann, P. J. (2016). The linear and non-linear relationship
between of tourism demand and output per worker: A study of Sri Lanka. Tourism Management Perspectives, 19,
109-120.
Schubert,
S.F., Brida, J.G. & Risso, W.A. (2011). The impacts of international
tourism demand on economic growth of small economies dependent on tourism. Tourism Management, 32(2), 377-385.
Li,
C.C., Mahmood, R., Abdullah, H. & Chuan, O.S. (2013). Economic growth,
tourism and selected macroeconomic variables: A triangular causal relationship
in Malaysia. Margin: The Journal of
Applied Economic Research, 7(2), 185-206.