Looking at the current political turmoil across the globe, this study aims to analyze the effects of interaction between political instability and terrorism on tourism development using panel data from 139 countries for the period 1999–2009. The study measures the extent to which a country’s political conflicts and terrorism can negatively impact its tourism industry. The results reveal that the effect of political instability on tourism is far more severe than the effects of one-off terrorist attacks. Surprisingly, the findings suggest that terrorist attacks increase tourism demand for those low- to moderate-political-risk countries. However, countries that experience high levels of political risk witness significant reductions in their tourism businesses. In addition, political volatility and terrorism together can cause serious damage to the tourism industry.

This article evaluates the effects of political instability, terrorism, and corruption on tourism development, particularly UNESCO-listed heritage destinations. Using a fixed-effects panel data analysis for 139 countries over the period 1999–2009, the result reveals that a one-unit increase in political instability decreases tourist arrivals and tourism revenue between 24% and 31% and 30% and 36%, respectively. Furthermore, in the presence of heritage, terrorism has negative effects on tourism demand even though its effect is lower than that of political instability. However, the study shows that an increase in corruption index would not have an adverse influence on tourist arrival numbers, particularly for those countries that have historical and natural heritage. Perhaps, many experienced travelers have expectations that they would require paying bribes to corrupt authorities for travel visa or permits to some tourist destinations in order to make things accessible. Moderation effect results indicate that political instability reduces tourism demand even in UNESCO-listed heritage destinations.

The paper examines the impact of political and economic freedom on inbound tourism for over 110 countries during 1995-2012. Panel country fixed-effects techniques are utilized to examine the relationship after controlling for other factors that contribute to inbound tourism.The results show that civil liberties and economic freedom (among several other freedom measures) are positively and significantly associated with inbound tourism. Examination of the moderation effect reveals that civil liberties (economic freedom) tend to play a more influential role on inbound tourism when the level of economic freedom (civil liberties) is relatively low.

This paper examines the effects of economic freedom, democracy and its interaction term on controlling corruption. The results indicate that interaction between economic freedom and democracy has a significant impact on combating corruption. Partial effect analysis shows that economic freedom reduces corruption in any political environment, and the effect is substantially greater with a higher-level of democracy. In contrast democracy increases corruption when the level of economic liberalization is low, however, once past the threshold level corruption is substantially lower with full economic freedom.

This article investigates the effect of corruption on tourism demand for a panel of countries during 1999–2009 by using panel least square and fixed effects regressions. Prior research has considered only the linear effects of corruption on tourism. We examine the relationship between corruption and tourism in a non‐linear framework after controlling for economic and heritage factors. The findings suggest that corruption has a significant effect on tourism demand and that this effect is non‐linear. Copyright © 2014 John Wiley & Sons, Ltd.