Modelling the asymmetric productivity effects of tourism demand

A recent critique of the tourism-growth literature raises concerns about whether tourism leads to permanent economic growth. We argue that tourism can be linked to total factor productivity. Tourism demand spurs efficiency gains in the tourism sector through learning by doing. However, because tourism is demand-led, asymmetric effects may arise in the tourism-productivity association. To model the permanent growth effects of tourism, we use panel asymmetric ARDL models with annual data from 94 countries over the period 1995–2018. The finding implies that tourism has permanent but asymmetric growth effects.