Does governance quality matter for FDI-led tourism development? A supply-side perspective

Abstract

This study examines the relationship between governance, foreign direct investment (FDI), and tourism demand. Rather than treating governance as a direct determinant in a tourism demand model, the multifaceted nature of this concept is recognized and nested in the broader supply-side environment of a destination. Reducing five World Governance Index (WGI) dimensions into one holistic governance measure, which is then utilized as an instrument and operates through FDI, this study incorporates the indirect impact of governance on tourism demand in a two-stage least square (2SLS) regression model. The key findings demonstrate that governance is positively associated with FDI accumulation and that this effect is positively conducive to tourism demand. The results suggest a development strategy for building a competitive and sustainable tourism industry should be encompassed in a broader project of enhancing the political-economic environment of the destination.

The impact of economic and environmental factors and tourism policies on the sustainability of tourism growth in China: evidence using novel NARDL model

“…The results revealed that FDI has a positive relation to the sustainability of tourism growth. These results agree with Sou and Vinnicombe (2021), which highlight that the investment from persons or firms from abroad in the tourism industry increases the financial resources, economic and physical resources, and regulations and provides efficient management. Thus, the encouragement of FDI for tourism firms enables them to broaden the scope of their business, improve the quality of their services as well, and keep on growing well over time.…”

Towards efforts to promote renewable energy development in Africa: Does governance quality matter?

“…More precisely, an adjustment of law or regulation can increase transaction costs and uncertainty, and reduce the attractiveness of investment in the renewable energy sector. 22 This has been corroborated by the study of Sou and Vinnicombe, 23 who emphasize the role of government in minimizing risk in order to increase FDI flows, which plays a significant role in promoting renewable development through transferring technology, promoting skilled labor, and strengthening human capital development. Second, political risk can be explained as a political change or instability which could contribute to hampering growth and investment.…”

A symmetric and asymmetric nexus between environmental sustainability and tourism development in BRIC nations: What is the role of good governance and globalization?

“…Existing literature has postulated that inefficient institutional quality, corruption, and political instability unmined tourism growth prospects in the long run, which eventually degraded equitable tourism-led economic growth (Del Monte and Papagni, 2001;de Vaal and EbbenInstitutions, 2011;Faheem et al, 2019;Andriamahery and Qamruzzaman, 2022;Xia et al, 2022;Zhuo and Qamruzzaman, 2022). The study of Sou and Vinnicombe (2021) advocated that good governance accelerates tourism development through the indirect channel that is governmental effectiveness and political stability which induces foreign capital flows into the economy for infrastructural development, and the tourism industry is one of the targeted industries. Thus, the presence of effective institutional quality, governmental effectiveness, and practices not only augments industrial development but also assists in sustainable economic progress.…”