Africa’s tourism development, political stability, and economic growth using the GMM econometric appraisal technique

Abstract With the advent of Sustainable Development Goals, the issues concerning tourism, political stability, and economic growth have become a prominent subject of discussion. This study evaluates the impacts of tourism development on the economic growth of 52 African countries from 2008 to 2023. The research period selected is special because it encompasses two significant global events: the rise of the COVID-19 pandemic and the Global Financial Crisis. Additionally, the study assesses how political stability and tourism development interact to affect Africa's economic growth. The two-step system generalized method of moments (2SY-GMM) econometric appraisal technique was employed to achieve the designed objective. The findings of the study disclose that tourism development (TAS) positively and significantly influences the economic growth rate of Africa before the introduction of political stability (POS) in Africa’s economic growth model. However, when the interactive term of political stability-tourism development (POS*TAS) is introduced in the model, the contribution of tourism development to Africa’s economic growth becomes significantly negative. Specifically, the 2SY-GMM shows that, when all other factors stay the same, a percentage change in the interactive term of political stability-tourism development is accompanied by an average decline of a 0.0718% in Africa's economic growth rate in the short run, while it reveals a decrease of 0.888% in the long run. This implies that once political stability was addressed in the growth model, Africa's tourism contribution to the economic growth rate became negative in both the short and the long term. Further, to improve the short- and long-term contributions of Africa’s tourism development to economic growth, member countries need to strengthen their commitment to establishing a politically stable environment and bolstering anti-terrorism efforts. Ultimately, this study suggests economic policies that encourage the Politically Stable Tourism-led Growth (STLG) if tourism development is to enhance Africa’s economic growth in a sustainable way.