Exploring the linkage between tourism, governance quality, and poverty reduction in Latin America

Abstract

It has been of great concern for policymakers and government officials to increase the economic trajectory of living standards. Tourism development over the years is outlined in the extant literature as an alternative pathway to sustainable development. However, there has been no consensus on the combined impact of institutional quality and key macroeconomic indicators and how they moderate tourism development and eradicate poverty. Thus, there is a need to eradicate extreme poverty and achieve Sustainable Development Goals (SDGs) by the end of 2030 to remain focused on areas for policymakers and researchers. To achieve this goal, this study examines the moderating effect of governance quality on the relationship between tourism and poverty alleviation using a panel of 15 Latin American countries over the period 2003–2015 using fixed effect (FE) as an estimation technique. For soundness of analysis, we applied the Panel Corrected Standard Errors (PCSE) model estimation, the two-system generalized method of moment (GMM) model estimation in this study. Our findings show that governance quality contributes to poverty reduction, while tourism development exacerbates poverty. Interestingly, the results reveal that tourism and governance quality have complementary impacts in alleviating poverty. Further, policy prescriptions are outlined in the concluding section.

Tourism towards the well-being of Small Island Developing States: Tourism Agenda 2030

“…According to Beck and Katz (1995), PCSE is more efficient than feasible generalized least squares (FGLS) estimator in a statistical scenario with presence of heteroscedasticity, first-order serial correlation and contemporaneous cross-sectional correlation. For example, Dossou et al (2021) use the PCSE to explore the linkage between tourism, governance quality and poverty reduction in 15 different Latin American countries between 2003 and 2015. Also, Xu et al (2022) based on a panel data model estimated with PCSE parameters to stablish the linkages between tourism development and corruption in 30 African countries over the period 1996–2020.…”

Income Inequality in Africa: Exploring the Interaction Between Urbanization and Governance Quality

“…According to Acemoglu et al, (2004) and North and Douglass (1989), the quality of institutions matters for economic growth. In the same vein, Dossou et al, (2021) documented that no country can achieve sustainable economic growth without good institutions. For example, good quality of institutions could spur urban infrastructural development, which by extension, could contribute to promoting income distribution (World Bank, 2011).…”

“…In recent years, income inequality has been widely debated among policymakers and researchers both in developed and developing countries, as it has increased dramatically (Dossou et al, 2021). According to Shi et al, (2020) and Dossou et al, (2023), rising income inequality could hamper economic growth.…”

Does E-Governance Reduce Income Inequality in Sub-Saharan Africa? Evidence From a Dynamic Panel

“…Income inequality has been always used to show how income has been distributed among the population, society or within region . Recently, income inequality has been increasing both in developed and developing economies (Dossou et al, 2021;Fang etal., 2020;Song et al, 2021;Xu et al, 2021). This has been corroborated by the recent rise in income inequality due to the COVID-19 pandemic.…”

“…Meanwhile, recent studies have argued that the improvement of income distribution depends on the quality of institutions or governance (Dossou et al, 2021;. However, institutional economists have theoretically and empirically pointed out the dual effect of the quality of institutions on income inequality (Acemoglu & Johnson, 2005;Acemogluet al, 2003;North & Douglass, 1989).…”