Socio-economic determinants of sustainable tourism and their nexus with energy, environment, and economy (3ES): A panel data analysis

Abstract

Tourism is a trillion-dollar industry, and sustainable development is a core issue in tourism development in the recent era. Sustainable tourism covers development's social, cultural, economic, and environmental aspects. Tourism development is essential for developed and developing economies because it has a multiplier effect. Tourism showed the potential to attain all 17 Sustainable Development Goals (SDGs). Therefore, this study explores the socioeconomic factors of promoting sustainable tourism in the high, upper-middle, low-middle-, and low-income counties. This study will also explore the effect of sustainable tourism on the economy, energy, and environment. A novel worldwide tourism index is developed, incorporating factors such as domestic tourism consumption, government spending on individuals, capital investment, tourist revenue, and tourism activity. It creates an infrastructure index using multiple indicators like access to clean fuels and technologies for cooking, access to electricity, drinking water, and essential sanitation services. The proposed period for the selected variable will be 1990–2022. therefore, we conducted second-generational unit root and cointegration tests due to the chances of cross-sectional dependence and slope heterogeneity. The regression analysis shows the impact of selected indicators on global tourism using a two-step difference GMM. The regression analysis shows the effect of selected indicators on clean energy, inclusive growth and environment using a two-step difference GMM. The increase in inclusive growth was reported due to increased FDI inflow, Trade openness, financial development, and global tourism in all income groups (upper-middle and low). The decrease in inclusiveness resulted from increased inflation (all panels). The increase in inclusive growth was found to be a 1 % increase in Global tourism growth, FDI, financial development, and infrastructure index. The increase in the global inclusive growth was 0.522 %, 0.4 %, 0.016 %, 0.097 % and 4.287 % for a 1 % increase in Global tourism, trade openness, financial development index, foreign direct investment and infrastructure index., respectively. It is beneficial to encourage financial development in tourism to receive the economic advantages of tourism. Tourism is linked to the generation of foreign currency, enhancing a country's financial stability. Therefore, governments should increase investment in tourism, i.e. transportation, restaurants, and hotels. Ensuring an enabling environment for tourism-related businesses is recommended by eliminating unnecessary regulations and providing credit to small businesses. It is also recommended that tourism-related tax revenue be invested in infrastructural development. The governments should ensure a peaceful environment and quality of institutions. The availability of cultural resources and ICT can also attract tourists.