Contribution of tourism to economic growth in Iran's Provinces: GDM approach

Abstract

The aim of this paper is to present a methodology for the decomposition of economic growth by industry which allows between provinces comparisons in Iran. The authors use the growth of real GDP per capita as a measure of economic growth and disaggregate it into economic growth created by tourism and economic growth created by other industries. A Growth Decomposition Method (GDM) is used for measuring the contribution of tourism to an economy's growth for Iran from period 2005–2014. The results show that the impact of tourism on economic growth is positive. Thus, for Iran it appears that tourism on the whole support the growth of the general economy. Results of the average contribution of tourism to economic growth in provinces in Iran show that, khorasan razavi had the highest contribution to economic growth, Gilan took the second place and Ardabil was third with more than 1% and further 28 provinces it still had a positive contribution although less than 1%. Keywords: Economic growth, Tourism economics, Growth decomposition method (GDM), Provinces of Iran