Influence of Tourism on Income Inequality in Transitional Economies: Does Foreign Direct Investment Matter?
Keywords:
Tourism; Transitional Economies; Income Inequality; Panel DataAbstract
This study investigated the impact of tourism on income inequality in transitional economies using panel data analysis methods, namely fixed effects, fully modified ordinary least squares (FMOLS), dynamic generalised methods of moments (GMM), pooled ordinary least squares (OLS) with data ranging from 1999 to 2019. The influence of the complementarity between tourism and FDI on income inequality in transitional economies was also investigated. There is no agreement in the literature regarding the influence of tourism on income inequality. The available literature on the subject matter produced results which lacks conclusiveness, are divergent and mixed, hence prompting the author to undertake this study to fill in the glaring gaps in the literature. To a large extent, the study observed that tourism, foreign direct investment, the complementarity effect, employment, human capital development, infrastructural development and information and communication technology significantly reduced income inequality in transitional economies. Transitional economies should develop and implement policies that are geared at enhancing tourism, employment, infrastructural development, foreign direct investment inflows, human capital development and information and communication technology to reduce income inequality. Further studies should estimate the minimum threshold level of tourism above which significant income inequality reduction occurs.
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Meyer, D.F. and Meyer, N. (2015). The role and impact of tourism on local economic development: A comparative study, African Journal for Physical, Health Education, Recreation and Dance, 21 (1), 1-14.
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Papatheodorou, A. (2004). Exploring the evolution of tourism resorts, Annals of Tourism Research, 31 (1), 219-237.
Rasool, H. Maqbool, S. and Tarique, M. (2021). The relationship between tourism and economic growth among BRICS countries: A panel co-integration analysis, Future Business Journal, 7 (1), 1-11.
Reis, M.M. (2021). Can tourism development reduce poverty and income inequality in low and middle-income countries. Master’s in economics FED Universidade Do Porto, 1-112.
Roslan, A.H. and Noor, M.S.Z. (2008). Does income from tourism sources have an equalizing effect on inequality among the poor? The case of Langkawi Island, Malaysia, European Journal of Tourism Research, 1 (2), 63-77.
Stead, R. (1996). Foundation quantitative methods for business. Prentice Hall. England.
Tan, D. and Morimoto, R. (2019). Tourism as a mechanism in reducing income inequality in developing economies. SOAS Department of Economics, University of London Working Paper Number 230.
Tsaurai, K. and Nyoka, C. (2019). Financial development-income inequality nexus in South Eastern European countries: Does the relationship vary with the level of inflation? International Journal of Services, Economics and Management, 10 (2), 110-125.
Tucki, A. and Pylak, K. (2021). Collective or individual? What types of tourism reduce economic inequality in peripheral regions? Sustainability, 13 (2021), 1-16.
Winter, T. (2019). Poverty and inequality: Exploring the role of tourism in Brazil’s Northeast, Sheffield Hallam University, Unpublished Doctoral Thesis.
World Bank (2001) ‘World Development Report 2000. Oxford University Press, New York, NY.
Zhang, J. (2021). The effects of tourism on income inequality: A meta-analysis of econometrics studies, Journal of Hospitality and Tourism Management, 48 (2021), 312-321.
Alam, M.S. and Paramati, S.R. (2016). The impact of tourism on income inequality in developing economies: Does Kuznets curve hypothesis exist? Annals of Tourism Research, 61 (November), 111-126.
Amin, H. Abolghasem, A.A. and Narjes, A. (2017). The impact of tourism on inequality in Iran (ARDL method). Heritage and Tourism Journal, 1 (4), 139-156.
Ayala, L. Carbonell, J.R. and Martinez, R. (2001). The impact of unemployment on inequality and poverty in OECD countries. Economics of Transition, 9(2), 417-447.
Aye, G.C. and Edoja, P.E. (2017). Effect of economic growth on C02 emission in developing countries: Evidence from a dynamic panel threshold model. Cogent Economics and Finance, 5 (1), 1-22.
Bartik, T.J. (1991). Who benefits from state and local economic development policies? Books from Upjohn Press.
Beheshti, M.B. Mohammadzadeh, P. Ghasemloo, P.M. and Ghasemloo, K. (2008). The impact of tourism development on income inequality in Iranian provinces. Tourism Planning and Development, 6 (22), 8-29.
Balassa, B. (1978). Exports and economic growth: further evidence, Journal of development economics, 5 (2), 181-189.
Boora, S.S. and Dhankar, S. (2017). Foreign direct investment and its impact upon the Indian hospitality industry. African Journal of Hospitality, Tourism and Leisure, 6 (1), 1-17.
Boakye-Gyasi, K. and Li, Y. (2015). The impact of Chinese FDI on employment generation in the building and construction sector of Ghana. Eurasian Journal of Social Sciences, 3(2), 1-15.
De Bruyn, C. Meyer, N. and Meyer, D.F. (2018). Assessing the dynamic economic impact of tourism in a developing region in South Africa. Journal of Economics and Behavioral, 10 (5), 274-283.
Fang, J. Gozgor, G. Paramati, S.R. and Wu, W. (2021). The impact of tourism growth on income inequality: Evidence from developing and developed economies. Tourism Economics, 27 (8), 1669-1691.
Im, K.S. Pesaran, M.H. and Shin, Y. (2003). Testing unit roots in heterogeneous panels, Journal of Econometrics, 115(1), 53-74.
International Monetary Fund. 2015. World Economic Outlook: Adjusting to Lower Commodity Prices. Washington (October).
Jacoby, H. (2000). Access to rural markets and the benefits of rural roads, Economic Journal, 110 (465), 713-737.
Jaumotte, F. Lall, S. and Papageorgiou, C. (2013). Rising income inequality: Technology or trade and financial globalization? IMF Economic Review, 61 (2), 271-309.
Johansen, A.L. (2014). The effect of human capital on income inequality: An econometric analysis. Unpublished Masters Thesis- Department of Applied Economics, Copenhagen Business School.
Kao, C. (1999). Spurious regression and residual-based tests for co-integration in panel data. Journal of Econometrics, 90, 247-259.
Kinyondo, A. and Pelizzo, R. (2015). Tourism, development and inequality: The case of Tanzania, Poverty and Public Policy, 64-79.
Kofi, O.A. (2016). Analyzing inequalities in tourism activities between local municipalities in the Eastern Cape Province of South Africa, African Journal of Hospitality, Tourism and Leisure, 5 (3), 1-21.
Kwabi, F. Ezeani, E. Owusu, A. and Woni, C. (2021). The impact of the media on tourism development and income inequality, Journal of Business Research, 1-14.
Levin, A. Lin, C.F. and Chu, C.S.J. (2002), Unit root tests in panel data: Asymptotic and finite-sample properties, Journal of Econometrics, 108 (1), 1-24.
Manzoor, F. Wei, L. Asif, M. Haq, M. and Rehman, H. (2019). The contribution of sustainable tourism to economic growth and employment in Pakistan, International Journal of Environmental Research and Public Health, 16 (19), 219-251.
Mehrara, M. and Shirmohammadi, P. (2019). The effect of tourism revenues on income inequality with the quantiles panel regression approach (Case study: Selecting developing countries), Tourism Management Studies, 14 (46), 197-222.
Meyer, D.F. and Meyer, N. (2015). The role and impact of tourism on local economic development: A comparative study, African Journal for Physical, Health Education, Recreation and Dance, 21 (1), 1-14.
Naseem, S. (2021). The role of tourism in economic growth: Empirical evidence from Saudi Arabia. Economies, 9 (117), 1-12.
Nguyen, C.P. Schinckus, C. Su, T.D. and Chong, F.H.L. (2021). The influence of tourism on income inequality. Journal of Travel Research, 60 (7), 1426-1444.
Odhiambo, N.M. (2021). Tourism development and poverty alleviation in Sub-Saharan African countries: An empirical investigation. Developmental Studies Research, 8 (2021), 396-406.
Papatheodorou, A. (2004). Exploring the evolution of tourism resorts, Annals of Tourism Research, 31 (1), 219-237.
Rasool, H. Maqbool, S. and Tarique, M. (2021). The relationship between tourism and economic growth among BRICS countries: A panel co-integration analysis, Future Business Journal, 7 (1), 1-11.
Reis, M.M. (2021). Can tourism development reduce poverty and income inequality in low and middle-income countries. Master’s in economics FED Universidade Do Porto, 1-112.
Roslan, A.H. and Noor, M.S.Z. (2008). Does income from tourism sources have an equalizing effect on inequality among the poor? The case of Langkawi Island, Malaysia, European Journal of Tourism Research, 1 (2), 63-77.
Stead, R. (1996). Foundation quantitative methods for business. Prentice Hall. England.
Tan, D. and Morimoto, R. (2019). Tourism as a mechanism in reducing income inequality in developing economies. SOAS Department of Economics, University of London Working Paper Number 230.
Tsaurai, K. and Nyoka, C. (2019). Financial development-income inequality nexus in South Eastern European countries: Does the relationship vary with the level of inflation? International Journal of Services, Economics and Management, 10 (2), 110-125.
Tucki, A. and Pylak, K. (2021). Collective or individual? What types of tourism reduce economic inequality in peripheral regions? Sustainability, 13 (2021), 1-16.
Winter, T. (2019). Poverty and inequality: Exploring the role of tourism in Brazil’s Northeast, Sheffield Hallam University, Unpublished Doctoral Thesis.
World Bank (2001) ‘World Development Report 2000. Oxford University Press, New York, NY.
Zhang, J. (2021). The effects of tourism on income inequality: A meta-analysis of econometrics studies, Journal of Hospitality and Tourism Management, 48 (2021), 312-321.
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2022-03-04
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Tsaurai, K. (2022). Influence of Tourism on Income Inequality in Transitional Economies: Does Foreign Direct Investment Matter? Array. EuroEconomica, 41(1). Retrieved from https://dj.univ-danubius.ro/index.php/EE/article/view/1614
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