Tourism Development and Economic Growth Markov Switching Model

Nowadays tourism industry is the world’s third profitable industry after the oil and the automotive industries. Moreover it is anticipated to become the first in the world by 2020. Here in from like other developing countries, despite a high potential for tourism, it has not benefited from tourism-related opportunities. However, tourism industry, as the main source of currency for the country, plays a major role in economic growth and solving problems including youth employment and also monetary and financial problems. Given the successful experience of numerous countries its tremendous impact on the economic development of countries we used nonlinear Markov- Switching models to investigate the influence of seasonal tourism on economic growth of Iran (1995-2010). Findings of the present study suggested a positive significant relationship between tourism revenues and economic growth (in Iran). As well, investment and inflation have respectively positive and negative impact on economic growth.