Is tourism effective in mitigating the shadow economy in developing countries? Evidence from China

ABSTRACT

Recent studies found that tourism can mitigate the shadow economy, but its effectiveness in a specific country remains uncertain. To fill the research gap, this study investigates the relationship between tourism and the shadow economy in China based on province level data for 2000-2016. The results reveal that the shadow economy will be adversely affected by tourism. Moreover, regional heterogeneity analysis indicates that in central and western regions of China, tourism is more effective in suppressing shadow activities. The findings contribute to a policy reference for mitigating the shadow economy and regulating tourism development.

KEYWORDS:

• The shadow economy
• tourism marketing
• Asia Pacific
• panel data
• IV estimator

Acknowledgments

We thank especially the Editor Prof. Kaye Chon  and two anonymous referees for very constructive remarks and suggestions. They make some pertinent comments on the previous version of this article. Nevertheless, any shortcomings that remain in this research paper are solely our responsibility.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 http://www.epsnet.com.cn

Additional information

Funding

This research is partially supported by Hunan Natural Science Foundation of China [grant number 2021JJ40548], Foundation of Hunan Educational Committee [grant number 21A0097] and the Evaluation Commission of Social Science Achievements of Hunan Province of China [grant number XSP20YBZ157]. Any shortcomings that remain in this research paper are solely our responsibility.