SOCIOECONOMIC DRIVERS OF INTERNATIONAL TOURISM: EVIDENCE FROM PANEL GMM WITH MEDIATING FDI AND GOVERNANCE EFFECTS

Abstract

This study examines how key socioeconomic factors influence international tourism by investigating the roles of Information and Communication Technology (ICT), public spending, financial development, and trade openness, while incorporating Foreign Direct Investment (FDI) as a mediating mechanism and control of corruption as a moderating institutional factor. Despite extensive research on tourism determinants, limited empirical evidence jointly evaluates mediation and moderation effects within a dynamic cross-country framework. Using panel data from 50 countries spanning 2000–2022 and sourced from the World Development Indicators, the study employs a comprehensive econometric strategy including panel regression techniques, diagnostic testing, cointegration analysis, and the Arellano–Bond Generalized Method of Moments (GMM) estimator to address endogeneity and dynamic persistence. The findings reveal that financial development consistently promotes international tourism, whereas ICT, public spending, and trade openness exhibit unexpected negative associations in baseline models. FDI demonstrates a significant mediating effect but is negatively associated with tourism outcomes, suggesting that aggregate investment inflows do not automatically benefit the tourism sector. Importantly, governance quality plays a conditional role: control of corruption significantly moderates the impacts of ICT and public spending, transforming public expenditure into a positive driver of tourism under stronger institutional environments. The strong persistence of tourism receipts highlights the dynamic nature of tourism development across countries. These results underscore the importance of institutional quality in determining whether economic and technological progress translates into tourism growth. The study contributes to tourism economics by integrating mediation and moderation mechanisms within a dynamic panel framework and offers policy insights emphasizing governance reform, targeted investment strategies, and effective allocation of public resources to support sustainable tourism development.