Exploring The Impact of Tourism Development and Governance on Economic Growth of Developing Economies: Evidence from Driscol-Kraay Approach

Abstract

This study undertakes a comprehensive panel data evaluation of 28 developing countries to explore the interconnected dynamics of tourism development, governance, and economic growth in developing economies. GDP is used as a proxy for economic growth and taken as dependent variable while International tourism receipts are used as tourism development and governance stability (GS) was used for governance. FDI and labor force are taken as control variable. In this study, analysis is based on descriptive statistics, correlation analysis, Breusch and Pagan cross section dependency test and second generation unit root tests (occurrence of cross-sectional dependency) have been applied. Moreover, Driscoll and Kraay (DK) standard error (based on fixed effects estimation) technique are used because of Heteroskedasticity, Autocorrelation, and Cross-sectional dependency. The findings indicate a robust positive influence of both tourism development and governance on the economic growth of developing economies. Nevertheless, effective policy interventions are imperative to address governance challenges prevalent in these economies.