Impact of Tourism on Economic Growth and Development in Africa

Abstract

During the 1990s, Africa experienced a rise in tourist arrivals from 8.4 million to 10.6 million and a growth in receipts from US$2.3 billion to US$3.7 billion. According to the World Tourism Organization, the tourism industry in sub-Saharan Africa enjoyed a robust annual market share growth rate of 10% in 2006. In spite of this, there are few empirical studies that investigate the contributions of tourism to the economic growth and development of African economies. Using panel data of 42 African countries for 1995 to 2004, this study explores the potential contribution of tourism to the economic growth and development within the conventional neoclassical framework. The results show that receipts from the tourism industry contribute significantly both to the current level of gross domestic product and to the economic growth of sub-Saharan African countries, as do investments in physical and human capital. The authors' findings imply that African economies could enhance their short-run economic growth by strengthening their tourism industries strategically.