Does Social Media Moderate the Link Between Tourism and Economic Well-Being? Evidence From the Iterated Gmm Approach

Abstract

The relevance of social media to tourism and, subsequently, economic wellbeing is demonstrable in the target marketing of tourism products and services to potential customers at tourist destinations. Using a dataset from the 40 most visited countries across different continents over the period 2009 to 2020, this study investigates the effect of tourism and social media on economic wellbeing. It also examines the moderating influence of social media on the underlying relationship. The study adopts the tourism-led growth hypothesis as the main theoretical rationale for the underlying relationship. The empirical analysis is conducted using the iterated general method of moments (GMM). The results show that tourism development helps to promote economic wellbeing, while social media has a dampening effect. Additionally, the findings indicate that a high level of social media penetration has a significant and positive moderating effect on the nexus between tourism and economic wellbeing. This suggests that social-media-driven tourism can significantly improve the economic wellbeing of destination countries. Conducive macroeconomic conditions and political stability are also concurrent with the contributory effects of tourism on the economic wellbeing of destination countries.