Abstract
ABSTRACT This study contributes to the literature by establishing the linkages between new institutional economics, public finance theory, and tourism economics, to explore the motives of capital investment into the tourism industry. We apply panel data techniques across a global sample of 150 countries, running from 2003 through 2017, encompassing 53 Low- and Lower-Middle-Income Economies (LMEs), 44 Upper-Middle-Income Economies (UMEs), and 53 High-Income Economies (HIEs). The findings are threefold. First, government tourism expenditure, economic growth, urbanisation, working or young population rate, and UNESCO heritage sites are found to be the leading drivers of tourism investment, whereas inflation and unemployment negate this development. Second, government expenditure could have stronger effects in LMEs and UMEs, while UNESCO heritage sites are a more crucial factor for UMEs and HIEs. Finally, it is proved that institutional quality improvements significantly boost capital tourism investment in LMEs.
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