International Tourism and Poverty Alleviation: Cross-Country Evidence Using Panel Quantile Fixed Effects Approach

Abstract

This paper evaluates the impact of tourism on poverty alleviation using a new panel quantile fixed effects method that allows regressors to affect the entire conditional distribution of the dependent variable providing substantial information gains. Our results show statistically significant negative marginal effects of tourism on both absolute poverty measures and Gini income inequality across all quantiles, including the poorest 10%. We also find evidence that international tourism can mitigate the slow improvement in domestic income level for poverty reduction. From a policy perspective, our findings can provide insights into developing targeted tourism policies and strategies to achieve better solutions on poverty alleviation. We also call for special attention to policymakers in developing countries to continue working on tourism product differentiation and targeting a smaller but reachable market in the post COVID-19 recovery era, to prevent the adverse effect of the worldwide income growth stagnation on their poverty rates.

Governance, tourism and inclusive growth in Africa

“…This has been corroborated by Agyei and Idan (2022), who argued that despite the expansion of economic growth in sub-Saharan African countries, poverty and income inequality continue to grow. This evidence has been supported by Lagos and Wang (2022), who have argued that poverty seems to be worsening in least developing countries. Similarly, the ongoing COVID-19 pandemic has exacerbated poverty and income inequality (Ofori, Osei, et al, 2022).…”

“…This can be corroborated by the argument of Kim and Kang (2020), who postulated that the involvement of international investments in the tourism sector through improving tourism sites and recreational facilities could contribute to provide new job opportunities, improve income distribution, alleviate poverty and thereby induce inclusive growth. Moreover, tourism has been viewed as an important tool to promote economic integration and globalization, which appear to generate jobs, reduce poverty and income inequality (Lagos & Wang, 2022). As such, it will directly induce inclusive growth.…”

“…Moreover, tourism has been viewed as an important tool to promote economic integration and globalization, which appear to generate jobs, reduce poverty and income inequality (Lagos & Wang, 2022). As such, it will directly induce inclusive growth.…”