SAJMS - South Asian Journal of Management Sciences

Threshold Nonlinear Impact of Control on Corruption and Government Effectiveness on Tourism Development in different Income Level Countries: Evidence from Panel Smooth Transition Regression Models

Control on corruption and government effectiveness are considered significant predictors of tourism development. However, despite its importance, a conspicuous gap exists in the literature on how these two indicators support tourism development for the economies in the long run. This research fills this gap by studying the influence of government effectiveness and control on corruption on tourism development for a sample of annual panel data of 149 countries of different income levels. The study utilizes the data set of 2002-2019, and the advanced econometric technique is applied. The PSTR technique provides the following results (i) the positive and significant association between the government effectiveness, control on corruption, and tourism development. (ii) The threshold values where the link between the control on corruption and tourism development changed in the lower, lower-middle, upper-middle, and higher-income nations are 27.222, 31.274, 46.766, and 88.615. Moreover, for government and tourism development, the values are 22.951, 36.228, 54.481, and 81.096. Thus, the study recommends that each income level country has to develop policies based on their threshold value to promote tourism development.

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