Does corruption undermine tourism development in Africa?

Abstract

ABSTRACT While the determinants of tourism demand have been extensively investigated, the impact of corruption on tourism development is less documented. To fill the gap in the literature, this study uses various indicators of tourism development and corruption measurement to examine the influence of corruption on tourism development in 30 African countries over the period 1996–2020. The empirical evidence is based on the fixed effect and panel corrected standard errors (PCSE) estimation techniques. The results unveil that the impact of corruption on tourism development is negative and statistically significant, both for domestic and international tourists. It indicates as corruption worsens, tourism-related investments and tourism destinations are negatively affected. These results support the sand-in-the-wheel hypothesis. Additionally, macroeconomic indicators like GDP growth, foreign direct investment and infrastructural development are found to be ideal for promoting the tourism sector. However, the magnitude of the impact of the variables varies across various specifications, particularly for the sub-Saharan sample group. Based on the results, policy implications are suggested from the study. The results recommended that institutional reforms and promotion of good governances are critical in order to maximize the benefits of tourism sector.