Transformations  in
Business & Economics

TOURISM DEVELOPMENT, TRAFFIC CARRYING CAPACITY, AND RESIDENTS' INCOME LEVEL
Lijun Jia, Wenjun Wang, Hui Yu, Mengdie Cui

ABSTRACT. This paper studies the relationship between tourism development and residents' income levels, taking traffic carrying capacity of host country into consideration. Using the panel data from 2001 to 2015 for 65 countries, this research used the SYS-GMM estimation method to explore the relationship. The empirical results support the hypothesis that the positive impact of tourism development on the growth of residents' income level depends on the level of economic development and the carrying capacity of transportation facilities in local economy. The results remain robust when using the EGARCH model. Consistent with the law of diminishing returns, we also found that for countries with high traffic carrying capacity, the higher the extent to which tourism develops, the less obvious its impact on economic growth is.
These empirical results provide the basis for recommendations to governments, and demonstrate a significant impact on the economic development from tourism of host country .

KEYWORDS:  tourism development, traffic carrying capacity, system GMM estimation, EGARCH model, residents' income level.

JEL classification:  P20, Q12, Q19.