The Effect of Tourism on GDP

Abstract: International tourism plays a huge role for many countries in the world. The significance of tourism differs between countries, however increase in tourism tends to lead to gross domestic product growth. The purpose of this paper is to measure those general effects of tourism on gross domestic product per capita. The theory part is focused on determinants of economic growth and GDP and the literature review examines general effects of tourism as well as the effect of tourism on specific countries and regions. The data is cross sectional and was gathered from 111 countries provided by World Bank. The results of this thesis show that international tourism seems to have positive relation with the level of gross domestic product per capita. However, the study also found that tourism specialisation tends to have negative relation on level of gross domestic product per capita and that countries that are most specialised in tourism are quite small states, usually located in the Caribbean Sea.