Exploring Poverty-tourism Nexus in South Asian Countries: A Panel Dynamic Estimation

Abstract

Using the time series from World Bank (1995–2019), the present article explores the relationship between tourism inflow and poverty alleviation (per capita household consumption) within the South Asian Association for Regional Cooperation (SAARC) region. The article employs three alternative approaches of PARDL, namely pooled mean group (PMG), mean group (MG) and dynamic fixed effects (DFE) estimators. In addition, two substitute single-equation models, namely dynamic ordinary least squares (DOLS) and fully modified ordinary least squares (FMOLS), are employed to estimate the long-run relationship between poverty alleviation, tourism inflow and other control variables. The results suggest that tourism inflow met the a priori expectation—positively influencing poverty alleviation within SAARC countries in the long run. Furthermore, poverty is reduced by increasing per capita income and output in the industry sector. Poverty can worsen due to an increase in the total trade of member countries. In addition, the findings indicate the insignificant impact of the agricultural sector on poverty alleviation and the unanimous effect of the service sector on poverty. Based on these findings present article frames various policy implications.