Impact of political risk and economic growth on the tourism industry: Evidence from a dynamic threshold panel model

Abstract

This paper analyzes the nonlinear impact of political risk and economic development on tourism revenues. A dynamic threshold panel model is applied to a sample of 119 countries over 8 years. A positive association between economic development and tourism revenues is identified. The results also show that the impact of improvements in political stability on growth in tourism revenues is dependent on the current level of economic development. For highly developed countries, increased political stability does not impact tourism revenues. However, there is a significant positive impact of improved political stability on tourism revenues for less-developed countries.