Over the decades, tourism as an industry has experienced continuous growth and deepening
diversification to become one of the fastest growing economic sectors in the world. Tourism
has become an important sector that has an impact on development of national economy. It
is also observed that foreign tourism has a positive effect on the long-run economic growth
through different channels. First, tourism is a significant foreign exchange earner which
allows for payment of imported capital goods or the basic inputs used in the production
process. Second, tourism plays an important role in stimulating investment in new
infrastructure and competition between local firms and firms in other tourist countries.
Third, tourism encourages other economic industries by direct, indirect and induced effects.
Fourth, tourism helps generate employment and increases income. Fifth, tourism can cause
positive exploitation of economies of scale in national firms (Fagance, 1999; Lin and Liu,
2000; Andriotis, 2002; and Schubert et al., 2011). Finally, tourism is an important factor in
the diffusion of technical knowledge, stimulation of research and development and the
accumulation of human capital.