Thai Tourism and Economic Development: the Current State of Research

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INTRODUCTION
The tourism industry is currently the worldûs largest and most diverse business sector since it serves as a primary source for generating revenue, employment, private sector growth, and infrastructure development for many countries. Researchers have argued that tourism development not only stimulates the growth of the industry, but also triggers overall economic growth (Lee and Chang, 2008). Hence, enhancing economic growth by promoting the tourism industry has become an important economic development strategy in most developing countries (Chen and Chiou-Wei, 2009). This belief is consistent with one of the three relevant hypotheses regarding the relationship between tourism development and economic expansion—namely, the tourism-led economic growth hypothesis, the economic-driven tourism growth hypothesis, and the reciprocal causal hypothesis. Economists emphasize the economic effects of tourism on the economy. The speedy growth of tourism causes an increase in household incomes and government revenues through multiplier effects, improvements in the balance of payments, and growth in the number of tourism-promoted government policies. As such, the development of tourism has usually been considered a positive contribution to economic growth (Lim, 1997; Oh, 2005). To date, there has been a vast amount of research conducted on the economic impact of tourism activity but the literature provides mixed results, with different studies arriving at different conclusions. Some of these studies, such as Ghali (1976), Balaguer and Cantavella-Jorda (2002), Dritsakis (2004a), Oh (2005), Kim et al. (2006), Lee and Chien (2008), reported results regarding the relationship between tourism and economic growth, but an explicit result is not obvious. A careful empirical analysis, such as the one shown in this study, is desirable for any country that may want to focus on the tourism industry as part of its national economic development policy. Thailand embraces a rich diversity of cultures and traditions. With its proud history, tropical climate and renowned hospitality, Thailand offers great potential for the development of tourism (Tourism Authority of Thailand, 2008a). Henkel et al. (2006) provide an extensive discussion of the various studies that have been conducted to determine the perceptions of international visitors about the image of Thailand. The results found that Thai residents and international visitors confirmed that cultural sightseeing, friendly people and food were significantly important when thinking of Thailand as a tourist destination, while international visitors felt that nightlife and entertainment were significantly more important than that of Thai residents. As McKinnon (1964) argued, international tourism brings foreign exchange that can be used to import intermediate and capital goods to produce goods and services, which in turn leads to economic growth. Foreign tourism is Thailandûs largest export industry. Sales of tourism goods and services to international visitors averaged US$10.2 billion in 1998›2005 on more than 10 million annual visitor arrivals. During 1998›2005, on average, Thai tourism directly and indirectly accounted for 13 percent of Gross Domestic Product (GDP) and 10 percent of employment which is approximately 3 million jobs and 12 percent of investment. Using the industryûs GDP share as a measurement, Thailand INTRODUCTION

The tourism industry is currently the worldûs largest and most diverse business sector since it serves as a primary source for generating revenue, employment, private sector growth, and infrastructure development for many countries. Researchers have argued that tourism development not only stimulates the growth of the industry, but also triggers overall economic growth (Lee and Chang, 2008). Hence, enhancing economic growth by promoting the tourism industry has become an important economic development strategy in most developing countries (Chen and Chiou-Wei,...
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