The Linear and Nonlinear Impacts of Political Risk on Inbound Tourism

This study investigates the impact of political risk on inbound tourism in the context of Mauritius. Political risk can be measured in several ways; the present study uses a comprehensive measure encompassing various political sub-components. In the first instance, the principal component analysis is used to design a political risk index, composed of various political sub-components. The political risk and tourism nexus is then explored using a dynamic time series approach with annual data covering the period 1990 to 2021, both in the short run equilibrium and in the long run. The findings reveal that in the long run, political risk negatively impacts inbound tourism. The study also attempts to assess the asymmetry in the political risk and tourism linkage. The results from the non-linear system imply that increase in political risk presents a higher impact on inbound tourism as compared to a negative change in political risk in the long run. The results from this study are expected to have pivotal implications for the targeted stakeholders and for future researchers in the field. This can help better monitor the level of risk and develop appropriate strategies to mitigate the effects of risk and attract visitors.