Digital regimes and the tourism-poverty nexus: evidence from panel smooth transition models in transition economies

This study investigates the nonlinear impact of tourism development on poverty reduction under different information and communication technology (ICT) regimes in 18 transition economies using an unbalanced panel dataset spanning 1995–2023. Poverty is measured through both infant mortality rates and household consumption expenditure to capture health and welfare dimensions. Conventional linear panel estimators provide preliminary evidence that tourism and ICT contribute to poverty reduction; however, the results are unstable across specifications, indicating the presence of nonlinear dynamics. To address this limitation, the study employs a Panel Smooth Transition Regression (PSTR) model, using government ICT expenditure as a threshold variable to identify regime-dependent effects. The findings reveal statistically significant ICT thresholds beyond which the poverty-reducing effects of tourism intensify substantially. In low-ICT regimes, tourism yields only modest welfare gains, whereas in high-ICT regimes, its impact on reducing infant mortality and increasing household consumption becomes markedly stronger. Moreover, economic growth, education, and urbanization exhibit significant poverty-reducing effects only after surpassing the ICT threshold, highlighting strong complementarities between digital infrastructure and structural development factors. Inflation consistently exacerbates poverty across regimes, while trade openness alone does not ensure inclusive welfare outcomes. Overall, the results emphasize that tourism-led poverty reduction in transition economies is conditional on digital readiness, underscoring the critical role of public ICT investment in promoting inclusive growth.