Relationship between institutional factors and economic development: the effect of tourism activity

Abstract This study examines the impact of institutional factors (e.g., finance, policy, infrastructure) influence national economic development of a region, testing whether these effects are mediated by entrepreneurial context perceptions and moderated by sectoral economic structure (tourism). We aim to assess how institutional factors influence economic development, explore the mediating effect of a general entrepreneurial context, and investigate the moderating role of the tourism industry. Using the PLS-SEM technique and data from the Global Entrepreneurship Monitor’s National Expert Survey (NES) and the World Bank, our findings highlight both the direct effect of institutional factors on economic development and the indirect effect mediated by the entrepreneurial context. Additionally, we find that the tourism industry positively moderates the relationship between institutional factors and economic development. These results underscore the importance of considering sector-specific dynamics when designing policies and strategies to foster entrepreneurship.