Global Perspective on Tourism-Economic Growth Nexus: The Role of Tourism Market Diversification

The tourism industry is well-known as a powerful driver of the economic growth of destinations. However, socio-political and financial fluctuations in the countries of origin and destination make the tourism industry more volatile and less beneficial to economic growth. The tourism market diversification (TMD) strategy supports the stabilizing of the industry and spurs the economic growth of destinations via several channels, e.g. minimizing the risk of over-dependence on one market and stabilization the number of foreign tourists and tourism receipts. We analyzed the effects of the TMD strategy on the economic growth of 75 destinations over the period 1995-2018. By applying the dynamic system GMM estimator, we found that the TMD strategy accelerates the economic growth of destinations. Our results are robust regarding different samples of countries. The growth effect of the TMD on the low and lower-middle-income groups is significantly higher than on the high and upper-middle groups.