Thai Tourism and Economic Development:
The Current State of Research
INTRODUCTION
The tourism industry is currently the world ûs largest and most diverse business sector since it serves as a primary source for generating revenue, employment, private sector growth, and infrastructure development for many countries. Researchers have argued that tourism development not only stimulates the growth of the industry, but also triggers overall economic growth (Lee and Chang, 2008). Hence, enhancing economic growth by promoting the tourism industry has become an important economic development strategy in most developing countries.
This belief is consistent with one of the three relevant hypotheses regarding the relationship between tourism development and economic expansion—namely, the tourism-led economic growth hypothesis, the economic-driven tourism growth hypothesis, and the reciprocal causal hypothesis. Economists emphasize the economic effects of tourism on the economy. The speedy growth of tourism causes an increase in household incomes and government revenues through multiplier effects, improvements in the balance of payments, and growth in the number of tourism-promoted government policies. reported results regarding the relationship between tourism and economic growth, but an explicit result is not obvious. A careful empirical analysis, such as the one shown in this study, is desirable for any country that may want to focus on the tourism industry as part of its national economic development policy.
Thailand has always been a great travel destination for business travelers and tourists from neighboring countries. Over the period 1998›2007, the total number of tourist arrivals to Thailand increased from 7.76 to 14.46 million. International tourism revenue in Thailand increased from 242,177 million baht in 1998 to 547,782 million in 2007 (Tourism Authority of Thailand, 2008b).
As mentioned, the Thai economy depends heavily on the performance of its tourism industries. Specifically, the millions of jobs and a substantial fraction of export earnings and a wide range of other industries are directly or indirectly interdependent with tourism management. Therefore, this paper focuses on reviewing the potential relationship between Thai tourism development and economic growth. There have been a number of empirical studies that have focused on investigating the relationship between tourism development and economic growth both in one country and in a cross- sectional context.
The main purpose of this introduction is to review the general literature on tourism development and economic growth. The remaining four sections of the paper present first, the role of tourism development and economic growth in the Thai economy, followed by two sections covering a literature review of tourism development and economic growth in both first the international and then the Thai context. The last section provides conclusions.
Roles of Tourimin The Thaieconomy
Tourism is one of the world largest industries and one of its fastest growing economic sectors. In many countries, tourism is a main strategy for regional development, as it stimulates new economic activities. Tourism may have a positive economic impact on the balance of payments, on employment, and on gross income and production, but it may also have negative effects, particularly on the environment.
Tourism is an increasingly popular component of the development strategy in low-income countries based on three reasons. First, that tourism can serve as a substantial source of foreign exchange earnings, so contributing to economic growth. Second, that tourism services are labor-intensive, so expansion of this industry will create jobs and improve income distribution.
However, the reciprocal hypothesis maintains that the causal relationship between economic growth and tourism expansion appears to be bidirectional, implying that a push in both areas is beneficial. Even though there is no causal relationship between tourism expansion and economic growth that can be found, it provides a reason to reflect on the effectiveness of tourism promotion strategies.
Economy in Spain Assumptions of economic growth, tourism, has been confirmed by long-term use and testing causality. Results showed that the income from international tourism has a positive impact on economic growth in Spain. The strong impact of tourism on the size of the parameters expected to reveal the existence of a long-term impact is multiplied. The study concluded that a significant impact of tourism on the economy of Spain justified the need for the public.