Institutional Quality and Tourism Growth Nexus in MENA Countries

Abstract

The study critically examines the impact of institutional quality within foreign direct investment-financial development-international tourist arrival nexus for selected MENA countries. The dynamic pool mean group Autoregressive Distributed Lag (ARDL) model is employed for the empirical data analysis from 2012 to 2018. The findings reveal that institutional quality has a positive impact in FDI and real GDP model. Contrarily, it has adverse effect in the model of financial development and international tourist arrival overtime. Hence in the short-run, financial development and real GDP vary inversely moreover international tourist arrival and financial development varies directly. The multivariate panel causality test reveals 4 significant uni-directional causalities. The robust finding suggests institutional policy measures to enhance FDI and international tourist arrival, and the deepening of financial development to stimulate and enhance economic growth.