The interaction effect of tourism and foreign direct investment on urban–rural income disparity in China: a comparison between autonomous regions and other provinces

Abstract

ABSTRACTConsidering the prevalence of income distribution between urban and rural areas especially in autonomous regions with specific ethnic features and relatively inferior economic conditions, and the probable role of tourism and FDI in reducing urban–rural income disparity, it is academically and practically critical to examine a combined role of tourism and FDI on urban–rural income disparity in autonomous regions in comparison with those effects in other provinces. Thus, this study aims to compare the interaction effect of tourism and FDI on alleviating urban–rural income disparity in autonomous regions with other provinces in China. This study used fixed effects regression models, employing 423 province-year observations composed of 30 provinces including five autonomous regions from 1993 to 2014. To accomplish research purposes, this study employs tourism income, FDI, and autonomous region dummy as main independent variables. And, the ratio of urban to rural consumption expenditures is included as a dependent variable. The result of this study shows that the interaction effect between tourism and FDI on reducing urban–rural income disparity in autonomous regions is significantly greater than other provinces. Based on this result, autonomous regions can optimize the effect of tourism on mitigating urban–rural income disparity through the adequate utilization of FDI.