Impact of Export of Travel Services on Current Account Balance and Growth in Mediterranean Countries
Impact of Export of Travel Services on Current Account Balance and Growth in Mediterranean Countries

Summary/Abstract: Observing the expanding and high share of export of travel services in both GDP andtotal export of services in Mediterranean countries, we focus our research on travelservice export in twelve countries from 1998 to 2018. We investigated both short-termand long-term significance of export of travel services for GDP growth in Mediterraneancountries using the VAR and VECM model and the fixed-effects panel OLS model. In ouranalysis of significance of export of travel services on current account balance, we appliedan accounting approach. Our application of the fixed-effects OLS model on the panel datawith GDP growth rate as the dependent variable has shown that, in the short run, exportof travel services has a positive impact on GDP growth. In the long run, Granger causalitybased on block exogeneity Wald tests evidenced that export of travel services has a positiveimpact on GDP growth, but only at the 10% significance level. Following the accountingapproach in our analysis of impact of export of travel services on overall current accountbalance, we evidenced a strong relevance of export of travel services in achieving currentaccount balance equilibrium.

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