Human development and tourism growth's relationship across countries: a panel threshold analysis

This paper explores the association between human development (HD) and tourism development (TD) by employing a panel threshold regression and using an extensive dataset of 133 countries for 24 years. We observed that the nexus between TD and HD for the entire dataset is not highly convincing; TD has an insignificant effect on the human development index (HDI). Furthermore, the nature of the relationship depends on the countries' current status of development. The study used a threshold regression framework to split the dataset based on per capita GDP, urbanization level, and trade openness, and the results revealed four different situations in the relationship between tourism and HD. The most prominent finding is the U-shaped relationship between tourism growth and human development. We find that the initial stages of tourism growth for low-income countries is not linked to supporting human development. The non-linear panel threshold model's estimation shows that HD on the destination population on account of TD depends on its country-specific characteristics. Therefore, each country needs to develop appropriate tourism and business policies based on their current economic parameter value threshold to promote HD.