Good and bad effects of corruption and political uncertainty on tourism-growth linkage: World-wide evidence

Abstract

This research looks at how plausible the tourism-led growth hypothesis is in the midst of corruption and political unpredictability. For empirical investigation, we utilize panel data from 1995 to 2018 for across the world. A dynamic panel data estimation method is employed for the estimation purpose. The outcomes of our analysis show that tourism-led growth is a phenomenon, but this is contingent on institutional factors. Specifically, high levels of corruption, political instability, and violence pose a significant barrier to beneficial effects of tourism on economic prosperity. We also employ panel quantile regression to estimate the asymmetric effects of tourism. Results of the analysis show that tourism is particularly beneficial for low-income economies. However, results also confirm that institutional factors such as corruption and political instability prevent countries, especially developing nations, from taking advantage of tourism.