This article analyzes the relationship between tourism and economic growth for a worldwide dataset of 179 countries during 1995–2016. Applying a panel data Granger causality test, bidirectional causality is found, supporting the feedback hypothesis at a worldwide level. The results show that a 100% increase in number of arrivals, tourism receipts, and tourism expenditure increases per capita GDP by 9%, 7%, and 10%, respectively. In contrast, a 100% increase in real per capita GDP increases number of arrivals, receipts, and expenditure by 54%, 91%, and 101%, respectively. Control variables such as human capital and gross capital formation as a percentage of GDP play an important role in tourism and economic growth.
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