An Investigation of the Relationship between Tourism Development and Economic Growth (1959-2004)

Tourism is now being considered in most countries as an economic sector playing an important role in development. Due to the Iranian Economy highly dependent on the oil revenue, the promotion of tourism activities is an effective way in order to reduce such dependence. According to the successful experiences of some countries in tourism development and its effect on their economic growth, this paper examines the relationship between international tourism and economic growth in Iran, using a Granger causality model over the period 1959-2004. The results indicate that the causality relationship between tourism and growth is bilateral, while there exists a long-run relationship between these mentioned variable.