Anatolk An lntematknslJournalof Tourbm and Hospbllty Reseanh Volume 17. Number 2, pp. ~iB7.2006 Copydght Q 2006 anatolla PrlntedIn Turkey. All rlghtr reserved 1303-2917/06 $20.00 + 0.00 Contribution of Tourism to Economic Growth: A Panel Data Approach UMMUHAN G~KOVALI Mugla Unlverdty Faculty of Economlcsand AdmlnlstraUve Sclences Department of Ewnomlcs 48170 K8teklI. Mugla Turkey Efnall: ummuha~u.edu.tr OZAN BAHAR Mugla Unlverslty Faculty of Economla and Admlnlstratlve Sclences Department of Ewnomla 48170 KOtekll, Mugla Turkey Emall: obahar@mu.edu.tr ABSTRACT Tourlsm Is one of the fastest growing sectors of the world economy. Tourlsm development may promote econornlc growth both directly and Indirectly, first by stlmulatlng the growth of other sectors and second by lncreaslngdornestlc lnwmes and effective demand. The commonly accepted argument on the contrlbutlon of tourlsm In economlc growth needs to be verified empirically as well. This paper emplrlcally Investigates whether the tourism led-growth hypothesls holds for the Medlterranean countries for the perlod of 1987- 2002. A panel data approach Is utillzed and coefflclent estimates are obtalned by uslngflxed effect and random effect models. As a result, the hypothesis that tourism Is conducive to economlc growth Is verified based on the regression results. On the whole, the ernplrlcal findings reveal that tradltlonal factors (capltal and labor) as well as a tourlsm related factor contribute to economlc growth for the Medlterranean couw trles under focus. Key words: economlc growth, Panel data approach, Mediterranean countries. Ummuhan Gdkovalr Is a faculty member In the Faculty of Burlness Admlnktratlon and Economlcs. Mugla Unlver- slty, Turkey. She obtalned her undergraduatedegree from Faculty of Polltical Science, Ankara Unlverslty. Turkey. She received Masters degree In Economlcs from Oklohorna State Unlverslty. USA and PhD degree from METU, Turkey. Her area of Interest Includes IPRs, economics of Innovatlon, economlc growth and development. Ozan Bahar Is a faculty member In the Faculty of BusinessAdmlnlstratlonand Economla, Mugla Unlverslty.Tur- key. He obtalned h k undergraduate degree from the Mllltary Academy (1992). He holds both Masters(2000)and PhD (2005) degrees In Economlcsfrom Mugla Unlverslty. His area of lnterest Includes lnternatlonaleconomics. mauoewnomlcs, ewnomlc growth. reglonal development, tourlsm economics and wmpetltlveness. Volume 17 Number 2 Winter 2006 155