Effect of inbound tourism on inclusive growth: Does institutionalized democracy matter?

This paper examines the effect of inbound tourism on inclusive growth and whether the effect is moderated by countries' democratic institutions. Using data from 154 countries from 2000 to 2020 and the dynamic generalized method of moments estimator, we found that inbound tourism (tourism arrival, receipt, and expenditure) is positively related to inclusive growth. Also, democracy is found to have a significant positive effect on inclusive growth. The results also showed that the impact of inbound tourism on inclusive growth is moderated by democracy. The results are consistently established when alternative econometric methods are applied, and they vary across income groups.