ROLE OF TOURISM IN ECONOMIC GROWTH IN CENTRAL ASIA AND SOUTH CAUCASUS

Tourism has become a key player in economic development, particularly in transition economies trying to diversify. This article examines the long-run relationship between tourism revenue and economic growth in Central Asia and South Caucasus. The research utilizes Fully Modified Ordinary Least Squares (FMOLS) to investigate tourism revenue and GDP per capita. Results of this study indicate a statistically significant and positive relation. A 1% increase in tourism revenues lead to an approximate 7.18% increase in GDP per capita. An R-squared value of (R-squared = 0.947) indicated that tourism revenues explained a large portion of variation in the economy. Aside from the positive effects of tourism, the study warns that too much reliance on tourism may turn harmful due to external shocks, sectoral imbalances, price changes, etc. Thus, the paper suggests that tourism should be integrated with differential development and that additional supporting infrastructure should be enhanced to allow for long-term sustainability.