International tourism, social distribution, and environmental Kuznets curve: evidence from a panel of G-7 countries.

Abstract

The study examined the long-run and causal relationship between international tourism receipts (ITR), social distribution, FDI inflows, and carbon (CO2) emissions to verify the different alternative and plausible hypotheses, i.e., environmental Kuznets curve (EKC) hypothesis, "pollution haven" hypothesis (PHH), and "resource efficiency" (REF) hypothesis, in a panel of Group of Seven (G-7) countries for the period of 1995-2015. The study employed panel random effect (RE) regression and panel causality test for robust inferences. The results show that ITR and FDI inflows increase CO2 emissions to verify PHH while government education expenditures (GEE) decrease CO2 emissions to substantiate the REF hypothesis across countries. The results validate the inverted U-shaped EKC relationship between CO2 emissions and economic growth (EG) with the turning point of US$30,900. In addition, GEE increase ITR while healthcare expenditures (HEXP) decrease ITR, which partially supported the REF hypothesis in a panel of countries. The impact of income inequality (INEQ) on ITR is positive at current time period while at later stages INEQ declines ITR that supported an inverted U-shaped relationship between them. The causality estimates confirm the bidirectional relationship between ITR and EG, while there is unidirectional casualty running from (i) ITR, EG, FDI inflows, and GEE to CO2 emissions, (ii) FDI inflows to ITR, (iii) GEE to EG, (iv) EG to social expenditures, (v) income inequality to health expenditures, (vi) social expenditures (SEXP) to ITR, and (vii) INEQ to ITR. There is no causal relationship found between ITR and EG during the study time period. The findings endorse the need for efficient resource spending, sustainable tourism (STR), and rational income distribution to improve environmental sustainability agenda in a panel of G-7 countries.