Asymmetric Effects of Tourism on the Geography of Economic Activities

Abstract

This study investigates the asymmetric effects of international and domestic tourism on economic complexity worldwide. Despite the significant contributions of international and domestic tourism to a country’s economic activities, their potential impacts on economic complexity remain underexplored in the literature. Using the Dynamic Fixed Effects Autoregressive Distributed Lag (DFE ARDL) model, this research estimates the short- and long-term effects of domestic and international tourism on economic complexity for 123 economies from 1995 to 2018. The empirical analysis reveals that domestic tourism spending has an insignificant negative impact on economic complexity in the short term. However, in the long run, it exerts a significant positive effect, suggesting that domestic tourism could be a powerful driver of the long-term geography of economic activities. In contrast, international tourism contributes to economic complexity in the short term, but its long-term impact is less significant. These findings affirm the instrumental role of tourism development in enhancing economic complexity and underscore the importance of a balanced approach to tourism development, considering its short‐ and long‐term effects on economic complexity. The study contributes to the literature by providing the first evidence of a connection between the tourism industry and economic complexity from a global perspective