Abstract
This paper focuses on the role of local governments in the development of tourism in China by examining 30 Chinese provinces from 2000 to 2018. The results of empirical research show that fiscal decentralization in China provides local governments with incentives for the development of high pollution industries and of large state-owned enterprises, which do not help the sustainable development of tourism. In addition, there is an “inverted U-shaped” relationship between pollution level and tourism development. Although the growth of China’s tourism industry is pollution-based currently, tourism revenue is considered to decline once a threshold is reached. The competition from local governments for foreign investment is conducive to the improvement of environmental quality and increase in tourism revenue. Based on this, we have proposed a series of sustainable tourism development measures.
Highlights
With the economic development and the improvement of living standards, tourism has gradually developed into an important driving force for China’s economic growth
The coefficient of PGDP is 1.428, which means that a 1% increase in per capita income leads to an increase of 1.428% in tourism revenue
In the past few decades, the development of China’s tourism industry has been mainly driven by the growth of the Chinese economy, which has caused a substantial increase in the level of environmental pollution
Summary
With the economic development and the improvement of living standards, tourism has gradually developed into an important driving force for China’s economic growth. Regarding the role of local government, Stewart [1] proposed the “race to the bottom” hypothesis; that is, in order to increase financial resources, expand the tax base, increase job opportunities, and maintain social stability, local governments tend to relax environmental regulations and lower the standard of environmental requirements. This competition between difference regions within China caused by fiscal decentralization would make some areas pollution-friendly. In-depth research on these issues will help to clarify the effects of economic development on local environment and development of tourism This can provide important insights for tourism policy making.
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