Abstract
This paper investigates the effects of the renewable energy consumption and the tourism investments along with the per capita gross domestic product (GDP), the real effective exchange rate, and trade openness on both tourism revenues (total tourism contribution to GDP) and international tourist arrivals in the sample of the G20 members. The annual data from 1995 to 2015 and the panel econometric techniques are utilized to achieve the objectives of the current paper. The results for the long-run elasticities from the panel fully modified ordinary least squares (FMOLS) estimations suggest that the renewable energy uses and tourism investments have a considerable positive impact on both the tourism revenues and the tourist arrivals. Given these results, it is argued that promoting both renewable energy and tourism investments should be considered as the major driving forces of tourism development in the G20 countries. Given these arguments, policymakers should initiate more of sustainable tourism development policies, which may assist those countries to expand the tourism industry further.
Highlights
The tourism industry has significantly grown in both emerging and advanced economies during the last few decades
The second channel can be defined as the “sustainability effect”; i.e. renewable energy requires an application of new technologies, and this can create a long run relationship between energy demand and tourism development, which is significantly related to the sustainability of tourism development (Irsag et al, 2012)
The current paper aims to analyse the effect of renewable energy on tourism development by considering other potential determinants, such as the per capita gross domestic product (GDP), the level of trade openness, and the real effective exchange rates
Summary
The tourism industry has significantly grown in both emerging and advanced economies during the last few decades. That adds value to improve the environmental quality and all these factors positively affect the growth of the tourism industry For this purpose, the current paper aims to analyse the effect of tourism investments on tourism development in the G20 countries using various panel data estimation techniques. We argue that higher renewable energy leads to low level of carbon emissions, while higher tourism investments assist the tourism companies to build new infrastructure facilities, which all play a substantial role in the promotion of tourism development These findings indicate that the policy makers of the G20 nations should further strengthen the policies that assist these economies to reduce the use of fossil fuel and attract higher tourism investments.
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