Effect of Tourism Sector on Turkish Economy: ARDL Bounds Testing Approach

Tourism occurs as a result of people traveling to other regions for various purposes such as traveling, resting, entertainment and learning. These travel activities carried out by people have an impact on growth rates by benefiting especially the economies of developed and developing countries from various aspects. For this reason, countries give more importance to the tourism sector and implement various policies and strategies to develop this sector. The relationship between tourism and growth is examined separately growth-led tourism and tourism-led growth. Therefore, tourism and growth play an important role in the development of countries by mutually influencing each other. This study purposes to analyze the relationship between tourism and growth by using the data of 1998:Q1-2019:Q4 period. In the study, real gross domestic product indicates growth while tourism revenues and the number of foreign visitors represent tourism. Within the scope of the analysis, primarily a bounds test is performed and it is concluded that there is a long-term relationship between the variables. Subsequently, the error correction model is examined and it is determined that the imbalances occurring in the short term can be corrected in the next period. As a result of the Granger causality test conducted to test the causality relationship between the variables, it is understood that the number of foreign visitors and tourism revenues are the Granger reasons for growth. As a result, we found the relationship between tourism and economic growth, and empirical results of the Granger causality analysis verify tourism-led growth in Turkey.