Do natural resources and corruption curse tourism development?
Abstract
This study examines the effect of resource endowment and corruption on countries’ inbound foreign tourism. Specifically, we examine whether growing resource endowment crowds out tourism industry and role of corruption in this process. For this purpose, we utilize panel data of 140 countries from 1995 through 2018. We utilize estimation technique in analysis that takes care of possible endogeneity in the models. Our results show that resource endowment and corruption lead to a reduction in tourism demand. However, the prevailing high level of corruption with resource richness may provide life-blood to the tourism sector. On the basis of these results, we argue that the ‘Dutch disease’ hypothesis for tourism is valid for the tourism sector across the world.