Examining the Causal Link between Tourism and Economic Growth of Countries in the MENA Region

Tourism has high potential to create foreign exchange and to increase employment and, thus, can play a crucial role in economic growth of all countries. In this paper, thus, it is tried to examine the relationship between tourism and economic growth of Iran and countries in the MENA region. Considering the very specific natural, historical, religious and cultural attractions of Iran and countries in the MENA, the main objective of this study is to examine the causal relationship between tourism and economic growth of Iran and MENA during the period of 1995-2012. For this purpose, The VAR method in the context of panel data and the Dumitrescu-Hurlin causality test are used. The results show that there is a positive and significant relationship between economic growth and tourism activities in Iran and the MENA region. Thus, it is suggested that Iran and MENA countries provide the necessary conditions for economic growth by investing in leading industries and infrastructure to improve tourism industry.