Impact of Governance Structure, Infrastructure, and Terrorism on Tourism

Abstract

This study explores the effect of governance structure, ICT infrastructure, physical infrastructure, and terrorism on tourism receipts for 102 countries. The study uses 18-year data ranging from 2002–2019. To test the relationship among variables in the short and long run, Panel ARDL is employed. Furthermore, this study extended the analysis by dividing the overall sample into five regions and four income groups. Results revealed that all variables are cointegrated. Pooled Mean Group model’s results show that physical and ICT infrastructure significantly impact tourism. Governance structure matters in high-income countries only. However, surprisingly terrorism incidents were not negatively affecting tourism receipts in the low and lower-middle-income countries. Terrorism was negatively impacting tourism in upper-middle-income countries only. Furthermore, ICT, physical infrastructure, and governance significantly affect tourism in different regions of the world. The causality test suggested unidirectional causation from tourism to terrorism and bidirectional causality for physical infrastructure and tourism. This study has important policy implications for all tourism and travel industry stakeholders.