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Tourism and Long-run Economic Growth in Aruba

Authors


  • Professor, Chair of the Tourism, Events & Attractions Department, and Associate Director of the Dick Pope Sr. Institute for Tourism Studies at the Rosen College of Hospitality Management, University of Central Florida.

  • Professor in Regional Economics and in Economic Geography, Faculty of Economics, VU University.

  • The views expressed in this article do not necessarily reflect those of the Central Bank of Aruba.

ABSTRACT

This study examines the long-run relationship between tourism development and economic growth in a small island destination. Determining whether the nature of the relationship is unidirectional or bidirectional provides insightful information as to policies to be implemented. This information is crucial in a resource-poor environment, such as a small island destination. The study employs an econometric methodology consisting of unit root testing, co-integration analysis, vector error correction modeling and Granger causality testing. Results confirm the reciprocal hypothesis. The policy implication is that resource allocation supporting both the tourism and tourism-related industries could benefit both tourism development and economic growth. Copyright © 2013 John Wiley & Sons, Ltd.

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