TOURISM, GROWTH, AND INCLUSION IN THE WORLD’S LEADING MUSLIM-FRIENDLY DESTINATIONS

This study examines whether Muslim-friendly tourism is associated with economic growth and whether growth is linked to unemployment and income inequality across the 20 leading destinations in the Global Muslim Travel Index 2024. The study further explores the indicative role of economic growth as a transmission channel linking tourism performance with socio-economic outcomes. Annual panel data spanning 2010–2024 are analyzed using the Panel Pooled Mean Group Autoregressive Distributed Lag approach to estimate both short-run and long-run relationships among the variables. Additional mediation analysis is conducted to examine the indirect role of economic growth in linking Muslim-friendly tourism with unemployment and income inequality. The findings reveal that Muslim-friendly tourism exhibits a significant positive long-run association with economic growth (θ = 0.5829). Tourism expansion is also negatively associated with unemployment (θ = -0.4273) and income inequality (θ = -0.2154), indicating inclusive development linkages. Economic growth further shows a negative relationship with unemployment (θ = -0.3064) and income inequality (θ = -0.2149), suggesting that growth functions as a transmission channel through which tourism development is linked to socio -economic welfare. In the short run, tourism expansion is positively associated with economic growth, whereas inflation tends to intensify inequality pressures. In addition, foreign direct investment appears to support productive capacity and inclusive economic expansion across Muslim-friendly tourism destinations. The findings suggest that Muslim-friendly tourism is closely associated with inclusive and sustainable development. Tourism expansion, when accompanied by macroeconomic stability and supportive investment conditions, is linked to better employment conditions, lower income concentration, and stronger long-term economic inclusiveness across leading Muslim-friendly tourism destinations.