Skip to main content

Advertisement

Log in

The role of tourism, trade, renewable energy use and carbon dioxide emissions on economic growth: evidence of tourism-led growth hypothesis in EU-28

  • Research Article
  • Published:
Environmental Science and Pollution Research Aims and scope Submit manuscript

Abstract

The article examines the effects of renewable energy, trade, carbon dioxide emissions and international tourism on economic growth in EU-28, considering panel data for the period 1995–2014. The investigation finds the new determinants of economic growth. The empirical results find support from the panel fully modified least squares (FMOLS), panel dynamic least squares (DOLS) and fixed effects (FE) as estimation techniques. The econometric results are consistent with the existing literature. The variables considered in this study are cointegrated in the first difference, as suggested by the panel unit root test. The present study seeks to advance the knowledge of the growth determinants, paying attention to the effect that both the tourism and energy sector exerts on economic growth for EU-28 countries. The empirical results demonstrate that trade openness, tourism arrivals and renewable energy encourage economic growth. Therefore, according to the econometric results, renewable energy allows improving environmental quality. However, CO2 emissions are positively correlated with economic growth, showing that growth is directly correlated by climate change and greenhouse gas. The results also confirm the tourism-led growth hypothesis (TLGH) for the panel. Finally, the empirical results confirm that trade openness, energy use and international tourism contribute to enhance economic growth. Based on these findings, further insights and policy prescription are offered in the concluding section.

Graphical abstract

This is a preview of subscription content, log in via an institution to check access.

Access this article

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or Ebook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Fig. 1
Fig. 2

Similar content being viewed by others

References

  • Ahiawodzi AK (2013) Tourism earnings and economic growth in Ghana. BritJ Econ Finan Manag Sci 7(2):187–202

    Google Scholar 

  • Alam MdS, Paramati SR (2017) The dynamic role of tourism investment on tourism development and CO2 emissions. Research notes and reports. Ann Tour Res 66: 183–215

  • Al-Mulali U, Ozturk I, Lean HH (2015) The influence of economic growth, urbanization, trade openness, financial development, and renewable energy on pollution in Europe. Nat Hazards 79(1):621–644

    Google Scholar 

  • Álvarez-Herránz A, Balsalobre D, Cantos JM, Shahbaz M (2017a) Energy innovations-GHG emissions nexus: fresh empirical evidence from OECD countries. Energy Policy 101:90–100

    Google Scholar 

  • Álvarez-Herranz A, Balsalobre-Lorente D, Shahbaz M, Cantos JM (2017b) Energy innovation and renewable energy consumption in the correction of air pollution levels. Energy Policy 105:386–397

    Google Scholar 

  • Amin SB, Kabir FA, Khan F (2019) Tourism and energy nexus in selected South Asian countries: a panel study. In: Current Issues in Tourism, pp 1–5

    Google Scholar 

  • Apergis N, Payne JE (2009) CO2 emissions, energy usage, and output in Central America. Energy Policy 378:3282–3286

    Google Scholar 

  • Arellano M (2003) Panel data econometrics. Oxford University Press, Oxford

  • Azam M, Khan AQ, Abdullah HB, Qureshi ME (2016) The impact of CO2 emissions on economic growth: evidence from selected higher CO2 emissions economies. Environ Sci Pollut Res 23(7):6376–6389

    CAS  Google Scholar 

  • Balaguer J, Cantavella-Jorda M (2002) Tourism as a long-run economic growth factor: the Spanish case. Appl Econ 34(7):877–884

    Google Scholar 

  • Balsalobre-Lorente D, Gokmenoglu K, Taspinar N, Cantos-Cantos JM (2019) An approach to the pollution haven and pollution halo hypotheses in MINT countries. Environ Sci Pollut Res 26:23010–23026

    Google Scholar 

  • Balsalobre-Lorente D, Shahbaz M, Roubaud D, Farhani S (2018) How economic growth, renewable electricity and natural resources contribute to CO2 emissions? Energy Policy 113:356–367

    Google Scholar 

  • Balsalobre-Lorente D, Driha OM, Sinha A (2020b) The dynamic effects of globalization process in analysing N-shaped tourism led growth hypothesis. J Hosp Tour Manag 43:42–52

    Google Scholar 

  • Balsalobre-Lorente, D., Driha, O.M., Bekun, & Adedoyin, F.F (2020a) The asymmetric impact of air transport on economic growth in Spain: fresh evidence from the tourism-led growth hypothesis. Current Issues in Tourism, 1–17

  • Beer M, Rybár R, Kaľavský M (2018) Renewable energy sources as an attractive element of industrial tourism. Curr Issue Tour 21(18):2139–2151

    Google Scholar 

  • Brida JG, Cortes-Jimenez I, Pulina M (2016a) Has the tourism-led growth hypothesis been validated? A literature review. Curr Issue Tour 19(5):394–430

    Google Scholar 

  • Brida JG, Lanzilotta B, Pizzolon F (2016b) Dynamic relationship between tourism and economic growth in MERCOSUR countries: a nonlinear approach based on asymmetric time series models. Econ Bull 36(2):879–894

    Google Scholar 

  • Carlsson, M., Lyhagen, J., & Österholm, P. (2007). Testing for purchasing power parityco-integrated panels. International Monetary Fund (IMF), WP/07/287 Washington, DC

  • Castro-Nuño M, Molina-Toucedo JA, Pablo-Romero MP (2013) Tourism and GDP: a meta-analysis of panel data studies. J Travel Res 52(6):745–758

    Google Scholar 

  • Çevik EI, Atukeren E, Korkmaz T (2019) Trade openness and economic growth in Turkey: a rolling frequency domain analysis. Economies 7(41):1–16

    Google Scholar 

  • Chen Y, Wang Z, Zhong Z (2019) CO2 emissions, economic growth, renewable and non-renewable energy production and foreign trade in China. Renew Energy 131:208–216

    Google Scholar 

  • Chirwa TG, Odhiambo NM (2018) Exogenous and endogenous growth models: a critical review. Compar Econ Res 21(4):63–84

    Google Scholar 

  • Choi I (2001) Unit Root Tests for Panel Data. J Int Money Finance 20(2):249–272

    Google Scholar 

  • Den Butter FAG, Verbruggen H (1994) Measuring the trade-off between economic growth and a clean environment. Environ Resour Econ 4(2):187–208

    Google Scholar 

  • Dogan E, Seker F (2016) The influence of real output, renewable and non-renewable energy, trade and financial development on carbon emissions in the top renewable energy countries. Renew Sust Energ Rev 60:1074–1085

    Google Scholar 

  • Dogan E, Seker F, Bulbul S (2017) Investigating the impacts of energy consumption, real GDP, tourism and trade on CO2 emissions by accounting for cross-sectional dependence: A panel study of OECD countries. Curr Issues Tour 20(16):1701–1719

    Google Scholar 

  • Dollar D (1992) Outward-oriented developing economies really do grow more rapidly: evidence from 95 LDCs, 1976-1985. Econ Dev Cult Chang 40:523–524

    Google Scholar 

  • Dollar D, Kraay A (2004) Trade Growth and Poverty. Econ J 114:22–49

    Google Scholar 

  • Domar ED (1946) Capital expansion, rate of growth, and employment. Econometrica 14:137–147

    Google Scholar 

  • Dumitrescu EI, Hurlin C (2012) Testing for Granger non-causality in heterogeneous panels. Econ Model 29(4):1450–1460

    Google Scholar 

  • Edmond CV, Midrigan DY, Xu (2015) Competition, mark-ups, and the gains from international trade. Am Econ Rev 105(10):3183–3221

    Google Scholar 

  • Eren BM, Taspinar N, Gokmenoglu KK (2019) The impact of financial development and economic growth on renewable energy consumption: empirical analysis of India. Sci Total Environ 663:189–197

    CAS  Google Scholar 

  • European Parliament (2016) Promotion of renewable energy sources in the EU. EU policies and Member State approaches, European Union, 24 p Retrieved from http://www.europarl.europa.eu/RegData/etudes/IDAN/2016/583810/EPRS_IDA(2016)583810_EN.pdf

  • Ferrer-Roca, N., Weston, R., Guia, J., Mihalic, T., Blasco, D., Prats, L., & Jarratt, D. (2020). Back to the future: challenges of European tourism of tomorrow. Journal of Tourism Futures.in press

  • Frankel JA, Romer D (1999) Does trade cause growth? Am Econ Rev 89:379–399

    Google Scholar 

  • Frankel, J.A., & Romer, D. (1996). Trade and growth: an empirical investigation. NBER Working Paper. 5476

  • Freund C, Bolaky B (2008) Trade, regulations, and income. J Dev Econ 87:309–321

    Google Scholar 

  • Gökmenoğlu K, Taspinar N (2016) The relationship between CO2 emissions, energy consumption, economic growth and FDI: the case of Turkey. J Int Trade Econ Dev 25(5):706–723

    Google Scholar 

  • Grossman G, Helpman E (1991) Quality ladders in the theory of growth. Rev Econ Stud 58:43–61

    Google Scholar 

  • Hamit-Haggar M (2012) Greenhouse gas emissions, energy consumption and economic growth: a panel cointegration analysis from Canadian industrial sector perspective. Energy Econ 34(1):358–364

    Google Scholar 

  • He LH, Zheng XG (2011) Empirical analysis on the relationship between tourism development and economic growth in Sichuan. J Agric Sci 3(1):212–217

    Google Scholar 

  • Hwang JH, Yoo SH (2014) Energy consumption, CO2 emissions, and economic growth: evidence from Indonesia. Qual Quant 48(1):63–73

    Google Scholar 

  • Im KS, Pesaran MH, Shin Y (2003) Testing for unit roots in heterogeneous panels. J Econ 115(1):53–74

    Google Scholar 

  • Isik C, Dogru T, Turk ES (2018) A nexus of linear and non-linear relationships between tourism demand, renewable energy consumption, and economic growth: theory and evidence. Int J Tour Res 20(1):38–49

    Google Scholar 

  • Jambor A, Leitão NC (2017) Economic growth and sustainable development: evidence from central and Eastern Europe. Int J Energy Econ Policy 7(5):171–177

    Google Scholar 

  • Jebli MB, Youssef SB, Ozturk I (2016) Testing environmental Kuznets curve hypothesis: the role of renewable and non-renewable energy consumption and trade in OECD countries. Ecol Indic 60:824–831

    Google Scholar 

  • Jebli MB, Youssef SB, Apergis N (2019) The dynamic linkage between renewable energy, tourism, CO2 emissions, economic growth, foreign direct investment, and trade. Latin Am Econ Rev 28(2):1–19

    Google Scholar 

  • Jebli MB, Youssef SB, Apergis N (2015) The dynamic interaction between combustible renewables and waste consumption and international tourism: the case of Tunisia. Environ Sci Pollut Res 22:12050–12061

    Google Scholar 

  • Kahia M, Kadria M, Aissa MSB, Lanouar C (2017) Modelling the treatment effect of renewable energy policies on economic growth: Evaluation from MENA countries. J Clean Prod 149:845–855

    Google Scholar 

  • Kao C (1999) Spurious regression and residual-based tests for cointegration in panel data. J Econ 90(1):1–44

    Google Scholar 

  • Kao C, Chiang M-H (1998) On the estimation and inference of a cointegrated regression in panel data, Working Paper, Center for Policy Research. Syracuse University

  • Kasman A, Duman YS (2015) CO2 emissions, economic growth, energy consumption, trade and urbanization in new EU member and candidate countries: a panel data analysis. Econ Model 44:97–103

    Google Scholar 

  • Keho Y (2017) The impact of trade openness on economic growth: the case of cote d’Ivoire. Cogent Econ Finan 5(1):1332820

    Google Scholar 

  • Kyoto Protocol (1997) United Nations framework convention on climate change. Kyoto Protocol, Kyoto 19:497

  • Lee JW, Brahmasrene T (2013) Investigating the influence of tourism on economic growth and carbon emissions: evidence from panel analysis of the European Union. Tour Manag 38:69–76

    Google Scholar 

  • Leitão NC (2014) Economic growth, carbon dioxide emissions, renewable energy, and globalization. Int J Energy Econ Policy 4(3):391–399

    Google Scholar 

  • Levin A, Lin CF, Chu CSJ (2002) Unit root test in panel data: asymptotic and finite sample properties. J Econ 108:1–24

    Google Scholar 

  • Long NV, Miao Z (2019) Vertically differentiated Cournot oligopoly: effects of market expansion and trade liberalization on relative markup and product quality, Tokyo

  • Lucas R (1988) On the mechanics of economic development. J Monet Econ 22:3–42

    Google Scholar 

  • Mitra SK (2019) Is tourism-led growth hypothesis still valid? Int J Tour Res 21(5):615–624

    Google Scholar 

  • Muhtaseb BM, Daoud HE (2017) Tourism and economic growth in Jordan: evidence from linear and nonlinear frameworks. Int J Econ Financ Issues 7(1):214–223

    Google Scholar 

  • Mustafa G, Rizov M, Kernohan D (2017) Growth, human development, and trade: the Asian experience. Econ Model 61:93–101

    Google Scholar 

  • Narayan PK, Narayan S (2005) Estimating income and price elasticities of imports for Fiji in a cointegration framework. Econ Model 22(3):423–438

    Google Scholar 

  • Ntanos S, Skordoulis M, Kyriakopoulos G, IArabatzis G, Chalikias M, Galatsidas S, Batzios A, Katsarou A (2018) Renewable energy and economic growth: evidence from European countries. Sustainability 10(2626):1–13

    Google Scholar 

  • Ozatac N, Gokmenoglu KK, Taspinar N (2017) Testing the EKC hypothesis by considering trade openness, urbanization, and financial development: the case of Turkey. Environ Sci Pollut Res 24(20):16690–16701

    Google Scholar 

  • Ozcan B, Ozturk I (2019) Renewable energy consumption-economic growth nexus in emerging countries: a bootstrap panel causality test. Renew Sust Energ Rev 104:30–37

    Google Scholar 

  • Papageorgiou C, Saam M, Schulte P (2017) Substitution between clean and dirty energy inputs: a macroeconomic perspective. Rev Econ Stat 99(2):281–290

    Google Scholar 

  • Paramati SR, Alam MS, Lau CKM (2018) The effect of tourism investment on tourism development and CO2 emissions: empirical evidence from the EU nations. J Sustain Tour 26(9):1587–1607

    Google Scholar 

  • Pedroni P (1999) Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxf Bull Econ Stat 61:653–670

    Google Scholar 

  • Rebelo S (1991) Long-run policy analysis and long-run growth. J Polit Econ 99(3):500–521

    Google Scholar 

  • Romer P (1986) Increasing returns and long run growth. J Polit Econ 98(5):71–102

    Google Scholar 

  • Roudi S, Arasli H, Akadiri SS (2018) New insights into an old issue— examining the influence of tourism on economic growth: evidence from selected small island developing states. Curr Issue Tour 22(11):1280–1300

    Google Scholar 

  • Saikkonen P (1991) Asymptotically efficient estimation of cointegration regressions. Econometric Theory 7(1):1–21

    Google Scholar 

  • Sebri M, Ben-Salha O (2014) On the causal dynamics between economic growth, renewable energy consumption, CO2 emissions and trade openness: fresh evidence from BRICS countries. Renew Sust Energ Rev 39:14–23

    Google Scholar 

  • Shaheen K., Zaman, K., Batoo, R., Khurshid, M., A., Aamir, A. Shoukry, A.M., Sharkawy, A. M., Aldeek, F., Khader, J., & Gani, S. (2019). Dynamic linkages between tourism, energy, environment, and economic growth: evidence from top 10 tourism-induced countries. Environ Sci Pollut Res, 26, 31273–31283

  • Sharif A, Saha S, Campbell N, Sinha A, Ibrahiem DM (2019) Tourism, environment, and energy: an analysis for China. Curr Issue Tour:1–20

  • Soava G, Mehedintu A, Sterpu M, Raduteanu M (2018) Impact of renewable energy consumption on economic growth: evidence from European Union countries. Technol Econ Dev Econ 24(3):914–932

    Google Scholar 

  • Solow RM (1956) A contribution to the theory of economic growth. Q J Econ 70(1):65–94

    Google Scholar 

  • Stock JH, Watson MW (1993) Simple estimator of cointegrating vectors in higher order integrated systems. Econometrica 61(4):783–820

    Google Scholar 

  • Tang CF, Ozturk I (2017) Is tourism a catalyst of growth in Egypt? Evidence from Granger non-causality and the generalised variance decomposition analysis. Anatolia 28(2):173–181

    Google Scholar 

  • Tang CF, Tan EC (2017) Tourism-led growth hypothesis: a new global evidence. Cornell Hosp Q 59(3):304–311

    Google Scholar 

  • Tang CF, Tiwari AK, Shahbaz M (2016) Dynamic inter-relationships among tourism, economic growth, and energy consumption in India. Geosystem engineering 19(4):158–169

    Google Scholar 

  • Tavares JM, Leitão NC (2017) The determinants of international tourism demand for Brazil. Tour Econ 23(4):834–845

    Google Scholar 

  • Thorpe M, Leitão NC (2014) Economic growth in Australia: globalisation, trade and foreign direct investment. Global Bus Econ Rev 16(1):75–86

    Google Scholar 

  • Tiwari AK, Ozturk I, Aruna M (2013) Tourism, energy consumption and climate change in OECD countries. Int J Energy Econ Policy 3:247–261

    Google Scholar 

  • Ulucak R, Khan SUD, Baloch MA, Li N (2020) Mitigation pathways toward sustainable development: is there any trade-off between environmental regulation and carbon emissions reduction? Sustain Dev in (press)

  • UNFCCC (2015). United nations framework convention on climate change. Paris agreement, New York

  • White H (1982) Instrumental variables regression with independent observations. Econometrica 50(2):483–499

    Google Scholar 

  • White H (1984) Asymptotic theory for econometricians. Academic Press, Orlando, FL

    Google Scholar 

  • World Tourism Organization (2018) European Union tourism trends. UNWTO, Madrid. https://doi.org/10.18111/9789284419470

  • World Bank (2019) World development indicators database. https://databank.worldbank.org/source/world-development-indicators

  • Yazdi SK, Shakouri B, Khanalizadeh B (2014) The granger causality among tourist arrival, economic growth, and CO2 emissions in Iran. Adv Environ Biol 8(13):632–637

    Google Scholar 

  • Yorucu V, Kirikkaleli D (2017) Empirical modeling of education expenditures for Balkans: evidence from panel FMOLS and DOLS estimations. Revista de Cercetare si Interventie Sociala 56:88–101

    Google Scholar 

  • Zafar MW, Shahbaz M, Hou F, Sinha A (2019) From nonrenewable to renewable energy and its impact on economic growth: the role of research & development expenditures in Asia-Pacific Economic Cooperation countries. J Clean Prod 212:1166–1178

    Google Scholar 

  • Zahonogo P (2017) Trade and economic growth in developing countries: evidence from sub-Saharan Africa. Journal of African Trade 3:41–56

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Daniel Balsalobre-Lorente.

Additional information

Responsible Editor: Eyup Dogan

Publisher’s note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Balsalobre-Lorente, D., Leitão, N.C. The role of tourism, trade, renewable energy use and carbon dioxide emissions on economic growth: evidence of tourism-led growth hypothesis in EU-28. Environ Sci Pollut Res 27, 45883–45896 (2020). https://doi.org/10.1007/s11356-020-10375-1

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11356-020-10375-1

Keywords

Navigation