Empirical Evidence for the Relationship between Globalisation and Tourism by Country Income Groups

Abstract

This study investigated the impacts of globalisation on international tourist arrivals in 72 countries between 2002 and 2019. Due to the endogeneity problem created by the mutual determination between tourism and globalisation, the two-step system generalised method of moments (GMM) was preferred to solve the problem. However, co integration analysis was used for low-income countries because of data limitations. Again, due to data limitations, the research results are limited in terms of generalisation for the whole world. Different panel data estimators were applied to three distinct groups (33 high-income, 30 middle-income, and 9 low-income countries). The results indicate that globalisation increased the number of inbound tourists in high-and middle-income countries. That is, globalisation is one of the major driving forces behind tourism development in these countries, regardless of income level. Regarding the two-step system GMM estimations, the coefficients of the globalisation variable were 0.58 and 0.38 for the high-and middle-income country group models, respectively, whereas there was no causality between globalisation and tourist arrivals in low-income countries. These findings fill a crucial gap in the literature by offering suggestions about the strategy to adopt while producing tourism policies for countries with different income levels.