Does Tourism Induce Sustainable Human Capital Development in BRICS Through the Channel of Capital Formation and Financial Development? Evidence From Augmented ARDL With Structural Break and Fourier-TY Causality

Abstract

The motivation of the study is to explore the nexus tourism-led sustainable human capital development (HCD) in Brazil, Russia, India, China, and South Africa (BRICS) for the period 1984–2019. The study applied several econometrical techniques for exposing the empirical association between tourism and HCD, such as the conventional and structural break unit root test, the combined cointegration test, long-run and short-run coefficients detected through implementing the Augmented Autoregressive Distributed Lagged (AARDL), and directional causality by following Toda-Yamamoto with Fourier function. The unit-roots test established variables are integrated in mixed order, wherein variables are stationary at a level or after the first difference. The estimated test statistics from the combined cointegration test and AARDL confirmed the long-run association between tourism, gross capital formation, financial development, and HCD. Tourism revealed a positive and statistically significant tie with HCD in the long run. Moreover, the joint effects of interactive terms TOR*GCF and TOR*FD (TOR, GCF, and FD denoting tourism development, gross capital formation, and financial development, respectively) established a positive and statistically significant relationship with HCD. In addition, the causality test revealed the feedback hypothesis available between tourism and HCD in all sample countries except India. In conclusion, the role of tourism development is critically important for sustainable HCD in BRICS. Therefore, in case of a policymaking concern, it is inevitable to address the tourism issues with care for capitalizing on the benefits for tourism development.