Designing policy framework for sustainable development in Next-5 largest economies amidst energy consumption and key macroeconomic indicators

Abstract

Global travel and tourism have enjoyed a significant boost due to the progress in air transport. However, the debate on air transport and the influx of foreign investments and global energy demand on economic development remains questionable. Therefore, this study is an attempt to contribute to the body of knowledge in the energy-tourism-led growth hypothesis literature. For this purpose, a novel approach to the effects of international tourism on economic growth is introduced for the Next-5 largest economies, namely (China, India, Indonesia, Turkey and the USA) between 1990 and 2018. Empirical results reveal a positive connection between foreign direct investment and income levels, electricity production and income levels, as well as between urbanization and economic growth. Moreover, the validation of the environmental Kuznets curve and the halo effect of foreign direct investment on the environmental degradation process provides a shred of more substantial evidence and fitting environmental instruments for policymakers. The empirical results encourage sustainable economic growth in these countries, mainly through the attraction of clean and high-technology foreign investment, the increase of the share of renewable energy sources in the energy mix and the regulation in the tourism industry. The novel contribution of this study to the empirical literature is the unification in the same research of the TLGH and the EKC for the Next-5 largest economies, establishing recommendations for tourism, energy efficiency and environmental correction process.