SOLUTION OF SOCIAL PROBLEMS IN
MANAGEMENT AND ECONOMY
International scientific-online conference
47
THE IMPACT OF TOURISM REVENUES ON ECONOMIC
DEVELOPMENT: AN EMPIRICAL ANALYSIS OF CENTRAL ASIAN
COUNTRIES.
Boburbek Khakimov
Senior lecturer, Oriental University, Tashkent
Muazzam Khakimova
Student, Uzbekistan State World Languages University
https://doi.org/10.5281/zenodo.15038663
Abstract.
This research examines the empirical relationship between
tourism revenues and economic growth rates. To carry out this study, data on
the share of tourism revenues in GDP and GDP growth rates for Central Asian
countries from 2000 to 2021 were obtained from the World Bank database. Due
to the heteroscedasticity problem in the GLS regression, the regression with
robust standard errors was used. The results showed a strong positive
relationship between the two indicators, specifically that a 1% change in
tourism revenues corresponds to a 0.5% change in GDP growth.
Keywords:
Tourism, tourism revenues, GDP, economic growth, GLS, robust
standard errors regression, empirical analysis.
1.Introduction.
Tourism is an important sector with the potential to make a significant
contribution to economic growth. The tourism industry encompasses a wide
range of activities, including transportation, accommodation, food and
beverages, entertainment, and cultural attractions. This paper discusses the
importance of the tourism sector in economic growth and the factors influencing
its indicators.
However, several factors influence the indicators of the tourism sector. One
of the key factors is the overall economic environment, including income levels,
consumer confidence, and exchange rates. During periods of economic
uncertainty, people may be less likely to travel, which could negatively impact
the tourism industry.
The natural and cultural resources of a destination are also a crucial factor
in the success of the tourism sector. A place with unique and attractive natural
or cultural attractions can attract more visitors. However, overuse or
mismanagement of natural resources can have a negative impact on the
environment, which in turn can negatively affect the tourism industry.
The tourism sector is an important contributor to economic growth,
providing jobs, income, and foreign exchange earnings. However, its
performance is influenced by several factors, such as the overall economic
SOLUTION OF SOCIAL PROBLEMS IN
MANAGEMENT AND ECONOMY
International scientific-online conference
48
environment, the competitiveness of the destination, natural and cultural
resources, political stability, and security. Policymakers need to develop
strategies aimed at promoting the growth of the tourism sector while ensuring
its sustainable and responsible management.
One of the main ways the tourism sector contributes to economic growth is
through job creation. According to a study conducted by the World Travel and
Tourism Council (WTTC), the tourism sector accounts for 10.4% of global
employment, supporting more than 319 million jobs in 2018. This is related to
the wide range of activities that make up the tourism industry, including
accommodation, food and beverages, transportation, and cultural attractions.
Tourism generates revenue and foreign exchange earnings, contributing to
economic growth. International tourists generally spend more money than
domestic tourists, which can increase the revenue of local businesses and
governments. According to WTTC data, in 2018, international tourism accounted
for $1.7 trillion of global GDP, or 2.4% of total GDP.
In addition, the tourism sector can stimulate other sectors of the economy,
such as agriculture and manufacturing, through the demand for goods and
services. This is known as the multiplier effect, which refers to the indirect
economic benefits that arise as a result of the initial tourism expenditures.
However, the impact of the tourism sector on economic growth may vary
depending on several factors. For example, the level of infrastructure and
investment in the tourism industry can influence its contribution to economic
growth. A study conducted by the United Nations Conference on Trade and
Development (UNCTAD) found that developing countries with insufficient
infrastructure and limited investment in the tourism industry contribute less to
economic growth compared to countries with more developed infrastructure.
The competitiveness of a destination is another important factor that
affects the contribution of the tourism sector to economic growth. The
competitiveness of a destination refers to its ability to attract and retain tourists
based on its attractiveness, convenience, conditions, and the availability of
services. Competition between destinations can be intense, and in order to
remain competitive, destinations must continually invest in improving their
infrastructure and services.
Moreover, political stability and security are crucial for the success of the
tourism sector. Political instability, conflict, or terrorism can deter tourists from
visiting a destination and damage the reputation of the tourism industry in the
region.
SOLUTION OF SOCIAL PROBLEMS IN
MANAGEMENT AND ECONOMY
International scientific-online conference
49
In conclusion, the literature shows that the tourism sector contributes
significantly to economic growth and development. However, its impact can be
influenced by various factors, including infrastructure, investments, competitive
positioning, political stability, and security. Policymakers need to develop
strategies that support the sustainable development of the tourism sector and
take these key factors into account in order to maximize its contribution to
economic growth.
Expanding the tourism sector can be one of the key ways to stimulate
economic growth, as it creates job opportunities. As the tourism sector grows, it
can generate new jobs in areas such as accommodation, food and beverages,
transportation, and cultural attractions. According to data from the United
Nations World Tourism Organization (UNWTO), the tourism sector is one of the
largest employers globally, accounting for one out of every ten jobs worldwide.
Moreover, the expansion of the tourism sector can lead to an increase in
foreign exchange earnings. International tourists typically spend more money
than local visitors, which can boost the revenues of local businesses and
governments. In addition, the tourism sector can stimulate other sectors of the
economy, such as agriculture and manufacturing, through demand for goods and
services. This ripple effect is known as the
multiplier effect
, where initial
spending by tourists generates additional economic activity in related
industries.
A number of studies have demonstrated a positive relationship between the
expansion of tourism and economic growth. For example, a study conducted by
Kim and Chen (2018) showed that tourism development had a positive impact
on economic growth in 17 countries in the Asia-Pacific region. Similarly, the
research by Fayissa et al. (2011) found that tourism development positively
influenced economic growth in Africa. These findings highlight the significant
role of tourism in driving economic development across different regions.
However, the impact of the expansion of the tourism sector on economic
growth may vary depending on several factors. For example, the level of
investment in the tourism industry may influence its contribution to economic
growth. A study conducted by Chiara and D'Alfonso (2015) found that
investments in the tourism industry are positively correlated with economic
growth in Italy.
Moreover, the competitiveness of the destination can affect the impact of
tourism on economic growth. A study conducted by Ribeiro and others (2019)
SOLUTION OF SOCIAL PROBLEMS IN
MANAGEMENT AND ECONOMY
International scientific-online conference
50
found a positive correlation between destination competitiveness and the
contribution of tourism to economic growth in Brazil.
In conclusion, the literature shows that expanding the tourism sector can
lead to economic growth through job creation, currency revenues, and
stimulating other sectors of the economy. However, the impact of tourism on
economic growth may depend on various factors such as investment,
competitiveness, and location. Policymakers should take these factors into
account when developing strategies aimed at expanding the tourism sector to
maximize its contribution to economic growth.
However, currently there are few empirical studies in the literature on
economics or tourism that explore the relationship between these two economic
variables. Their relationship is worth studying at both the macro and micro
levels. Therefore, in this paper, we aim to examine the relationship between the
tourism sector and economic growth.
2.Methodology
Identifying the relationship between the expansion of the tourism sector
and economic growth is crucial for selecting appropriate statistical indicators. In
this study, two statistical indicators were chosen using the World Bank's
database. As an indicator of the expansion of the tourism sector, the percentage
share of tourism receipts in GDP was selected. An increase in the share of
tourism receipts in GDP reflects the growth in the activities of the tourism
sector. As an indicator of economic growth, the annual growth rates of GDP were
chosen.
Based on the obtained statistical data, the following model was formulated:
This model's regression analysis is intended to be conducted using the
STATA software. The dataset includes the Central Asian countries, namely
Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan. The data was
collected for the years 2000-2021.
Turning to the descriptive statistics of the collected numbers, Table 1
provides information on the summary statistics of the data. As can be seen, the
number of observations available for the regression analysis is 68, as tourism
indicators were not collected for all years across all countries. The average
economic growth in Central Asian countries is 6.34%, while tourism revenues
have grown on average by 8.97%. The skewness (Skew.) and kurtosis (Kurt.)
values, which represent the distribution statistics of the variables, do not exceed
the commonly accepted ranges of [-2;2] and [-7;7], respectively.
SOLUTION OF SOCIAL PROBLEMS IN
MANAGEMENT AND ECONOMY
International scientific-online conference
51
GDP
Tourism
Table 1. Descriptive Statistics of Economic Indicators
Among the 5 Central Asian countries in the dataset, the GDP indicators for
Uzbekistan, which are of particular interest to us, are presented in Figure 1.
From this diagram, it can be observed that the GDP reached its highest growth in
2007, remaining stable until 2015. In 2016, a sharp decline was observed due to
changes in the currency exchange process, which was moved from a strictly
regulated system to a fluctuating one, and the sharp decline in 2019 was caused
by the COVID-19 pandemic that started that year.
Figure 1. Uzbekistan GDP Growth. Figure 2. Uzbekistan Tourism
Revenues.
Information about the dynamics of tourism revenues can be seen in Figure
2. Data on Uzbekistan's tourism revenues has been included in the World Bank
database since 2015, and since then, it has steadily increased until 2019, after
which a sharp decline was observed due to the COVID-19 pandemic.
The relationship between these two indicators is presented in the scatter
plot in Figure 3. From the scatter plot, it can be seen that for Kyrgyzstan,
Kazakhstan, and Uzbekistan, the relationship between tourism and economic
growth is positive, while for Tajikistan, it is difficult to determine the direction of
the relationship.
SOLUTION OF SOCIAL PROBLEMS IN
MANAGEMENT AND ECONOMY
International scientific-online conference
52
Figure 3. Relationship Scatter Plot. Figure 4. Difference Scatter
Plot.
The scatter plot of the differences in economic indicators is presented in
Figure 4. From the scatter plot, it can be seen that tourism revenue has a positive
impact on economic growth.
Histograms of the indicators were created to check the level of normality of
their distribution. They are presented in Figure 5.
Figure-5. a) GDP Figure-5. b) Tourism Revenues
From this diagram, we can see that both GDP and tourism revenues
conform to normality.
3. Analysis of Results.
When analyzing the presented data, it should be noted that the relationship
between the indicators should be positive. To determine this relationship, a
correlation analysis was conducted using the STATA-14 software and presented
as follows:
SOLUTION OF SOCIAL PROBLEMS IN
MANAGEMENT AND ECONOMY
International scientific-online conference
53
This study shows that the correlation between the two variables is negative
and very weak, amounting to 0.029.
The regression analysis of the indicators is carried out using the OLS
(Ordinary Least Squares) method. This was performed in the STATA-14
software using the 'regress' command.
*** p<.01, ** p<.05, * p<.1
Looking at the regression results, the overall and specific significance levels
of the model are very weak. The impact of tourism revenue on gross domestic
product is also negative.
Breusch-Pagan / Cook-Weisberg test for heteroskedasticity
Ho: Constant variance
Variables: fitted values of yaim
chi2(1) = 3.15
Prob > chi2 = 0.0761
The Breusch-Pagan heteroscedasticity test conducted for model verification
shows that the model suffers from heteroscedasticity problems. To address this
issue, the regression results conducted using White’s robust standard errors are
presented below.
SOLUTION OF SOCIAL PROBLEMS IN
MANAGEMENT AND ECONOMY
International scientific-online conference
54
*** p<.01, ** p<.05, * p<.1
Discussing the results of the robust regressions, both the overall
significance level of the model and the individual significance level of the
regressors have significantly improved. The impact of tourism revenue on GDP
has also become positive. The results of the Breusch-Pagan test conducted to
check for heteroscedasticity in the model showed that the model does not suffer
from heteroscedasticity problems.
Breusch-Pagan / Cook-Weisberg test for heteroskedasticity
Ho: Constant variance
Variables: fitted values of yaim2
chi2(1) = 0.00
Prob > chi2 = 0.9851
The analysis of the results suggests that there is a strong positive
correlation between tourism revenues and GDP growth rates.
4.Conclusion
.
This study examines the empirical relationship between tourism revenues
and GDP growth rates. For this purpose, data from the World Bank was used,
specifically the share of tourism revenues in GDP and GDP growth rates for
Central Asian countries from 2000 to 2021. Due to the issue of
heteroskedasticity in the OLS regression, a regression with robust standard
errors was employed. The results indicated a strong positive relationship
between the two indicators, with a 1% change in tourism revenue
corresponding to a 0.5% change in GDP growth.
Based on this data, it is emphasized that for Uzbekistan, focusing on the
development of the tourism sector, increasing the scope of reforms in the sector,
and ensuring the availability of firms and personnel capable of providing high-
quality services should be promoted as practical measures
SOLUTION OF SOCIAL PROBLEMS IN
MANAGEMENT AND ECONOMY
International scientific-online conference
55
References:
1. Chiara, O. D., & D'Alfonso, T. (2015). Tourism and economic growth: A review
of empirical
literature. Journal of Economic Development, 40(3), 1-24.
2. Fayissa, B., Nsiah, C., & Tadasse, B. (2011). The impact of tourism on economic
growth and
development in Africa. Tourism Economics, 17(6), 1369-1391.
3. Kim, H., & Chen, M. H. (2018). The impact of tourism on economic growth:
Evidence from
the Asia-Pacific region. Asia Pacific Journal of Tourism Research, 23(1), 17-28.
4. Ribeiro, R. S., Gonçalves, P., & Coelho, A. (2019). Tourism and economic
growth in Brazil:
Evidence from a panel data analysis. Revista Brasileira de Estudos de População,
36(1), 1-19.
5. UNWTO. (2021). UNWTO world tourism barometer. World Tourism
Organization. Retrieved from https://www.unwto.org/tourism-barometer
