ABSTRACT Tourism activity is a pivotal driver of global economic growth in an era of globalisation. Yet, its ecological footprints call for urgent sustainable practices. This paper enriches intricate interconnections between tourism, economic growth, and sustainability. Novel insights bridge gaps in understanding the effects of domestic and international tourism, regional heterogeneities, and spill-over effects, focusing on Italian regions (2004–2019). Based on a new neoclassical model, this study integrates key indicators beyond Gross Domestic Product and physical capital, encompassing sustainability (renewable energy) and human capital within the KLEM (Capital, Labour, Energy, Materials) specification. These frameworks assess multifaceted dynamics and raise questions about whether high tourism specialisation can lead to a trap for economic growth, development and, ultimately, socio-economic inequalities. Significantly, the research uncovers notable regional heterogeneities, and spill-over effects, shedding light on distinct economic trajectories and challenges, triggering the pursuit of resilience strategies. By highlighting intricate tourism-economy-sustainability connections, this study advances sustainable tourism understanding, urging a delicate balance between tourism's economic benefits and ecosystem concerns. It emphasises the need for eco-conscious practices and economic diversification to ensure harmonious development, aligning with the SDG agenda (UN, 2024).
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