The Role of Globalization and Country Risks in International Tourism Development: Evidence from Global Panel-Data Analysis

This study investigates the relationship between globalization, international country risks, and international tourism development. Different approaches of panel regression were applied to the panel data from a sample including 133 countries to determine if country risks and globalization indicators are linked with international tourism development. The findings present evidence that economic, social, and political globalizations are significant factors for tourism development. Thus, this study proves that economic, social, and political integration of countries are significant driving forces behind their tourism development. The findings also show that real exchange rate, overall population, and gross domestic product do also exert statistically significant effects on tourism development of the selected 133 countries. The results also indicate that country risks factors complied by ICRG are the other important determinants of international tourism development respectively. The country risk dimensions involving economic, political, and financial factors, all have a significant role in describing tourism development. The results reveal that, considering political factors, corruption, investment profile and government stability are the most important determining factors of tourism development. There is a negative association between tourism development and six political risks dimensions including corruption, ethnic tensions, military in politics, religious tension, internal and external conflict. It indicates that higher level of country risk related to these variables is noticeably associated with less tourism development and vice versa. Considering economic risk factors, current account as % of GDP and inflation are the most important defining factors. Considering financial risk factors current account as % of XGS and net international liquidity significantly and positively impacts on all tourism development. Exchange rate stability also positively impacts on tourism development. This study‟s outcomes have important implications for policymakers. Policy makers should consider the impacts of different dimensions of globalization and country risks while forecasting and planning strategies to improve tourism industry. Policy-makers should consider the negative effects of risks dimensions on tourism, as it has recently been one of the most vital sectors for development in many countries. Keywords: Globalization indicators, Country risks indicators, Tourism development, Dynamic Panel