The Effect of Tourism on Economic Growth: The Case of OIC Member Countries

Tourism industry has been the fastest and the most income-generating industry in the first decade of the third millennium. It has been for many countries including some of OIC member countries a source of foreign exchange and contributed into their development. In this paper, we try to test empirically whether tourism expansion has had any significant effect on economic growth of OIC member countries or not. Applying econometrics technique of Generalized Method of Moments (GMM) on static and dynamic panel data for the period of 1990-2007, we try to estimate the fixed and random effects of tourism on economic growth. Our empirical findings show that there is a strong relationship between tourism expenditures in OIC member countries and their per capita GDP.