Foreign Direct Investments and Tourism: A Cross-Sectional Analysis

ABSTRACT

This study investigates the effect of foreign direct investments (FDI) on tourism using cross-sectional data for 135 countries and their high- and middle-income subgroups. The study takes three different tourism performance indicators into account: travel and tourism GDP, international tourism receipts, and international tourist arrivals. The findings support that FDI positively affects all three tourism performance indicators. Furthermore, this effect is observed to be at the highest level on the international tourism receipts and at the lowest level on travel and tourism GDP. These results indicate that FDI affects international tourism considerably more than it does domestic tourism; it also boosts the tourism sector of the host countries in terms of brand value or market power. In addition, the results for the high- and middle-income countries are in accordance with the theoretical expectations of neoclassical economics in that FDI affects tourism more in middle-income countries.

KEYWORDS:

• Foreign direct investment
• tourism gross domestic product
• international tourism receipts
• international tourist arrivals
• cross-sectional data

Disclosure statement

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

Notes

1 Australia, Austria, Bahrain, Belgium, Brunei Darussalam, Canada, China Hong Kong (SAR), China Taiwan (Province of), Chile, Croatia, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Republic of Korea of, Kuwait, Latvia, Lithuania, Luxembourg, Malta, Mauritius, Netherlands, New Zealand, Norway, Oman, Panama, Poland, Portugal, Qatar, Romania, Saudi Arabia, Seychelles, Singapore, Slovakia, Slovenia, Spain, South Cyprus, Sweden, Switzerland Liechtenstein, Trinidad and Tobago, United Arab Emirates, United Kingdom, United States of America, and Uruguay.

2 Albania, Algeria, Angola, Argentina, Armenia, Azerbaijan, Bangladesh, Benin, Bolivia (Plurinational State of), Bosnia and Herzegovina, Botswana, Brazil, Bulgaria, Cambodia, Cameroon, China, Colombia, Congo (Democratic Republic of the), Costa Rica, Côte d’Ivoire, Dominican Republic, Ecuador, Egypt, El Salvador, Georgia, Ghana, Guatemala, Guinea, Honduras, India, Indonesia, Iran (Islamic Republic of), Jamaica, Jordan, Kazakhstan, Kenya, Kyrgyzstan, Lao People's Dem. Rep., Lebanon, Lesotho, Malaysia, Mexico, Republic of Moldova, Mongolia, Montenegro, Morocco, Namibia, Nepal, Nicaragua, Nigeria, Pakistan, Paraguay, Peru, Philippines, Russian Federation, Serbia, Senegal, South Africa, Sri Lanka, Tanzania (United Republic of), Thailand, Tunisia, Türkiye, Ukraine, Venezuela (Bolivarian Republic of), Viet Nam, Zambia, and Zimbabwe.

3 Burkina Faso, Burundi, Chad, Ethiopia, Gambia, Haiti, Malawi, Mali, Mozambique, Rwanda, Sierra Leone, Tajikistan, Uganda, and Yemen.