Are good institutions required to import economic growth? The case of tourism

Abstract

Does a country need good institutions to use tourism as an economic development activator? From a sample of non-organisation for economic co-operation and development countries, this article aims to assess the feasibility of tourism-led growth in different institutional settings. The results not only suggest that a tourism shock is good for gross domestic product growth but that inclusive institutions enhance the ability of a country to convert tourism into growth. It also emphasises that beyond tourism that remains a major transmission channel for growth, inclusive countries largely benefit from growth in their neighbouring countries. They are more able to import economic growth from abroad.