The Role of Tourism Development in Promoting Income Equality: A Case Study of GCC Countries

Nouf Alnafisah ()
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Nouf Alnafisah: Department of Economics, College of Business Administration, King Saud University, P.O. Box 71115, Riyadh 11587, Saudi Arabia

Sustainability, 2025, vol. 17, issue 10, 1-26

Abstract: In recent years, the importance of developing the tourism sector and diversifying income sources has grown in the Gulf Cooperation Council (GCC) countries. This paper estimates the impact of tourism industry development on income equality in the GCC region from the first quarter of 2014 to the fourth quarter of 2023. Furthermore, this paper evaluates the existence of the Kuznets curve and its implications for income distribution. To achieve these objectives, this study employs panel cointegration tests and the cross-sectionally augmented autoregressive distributed lag (CS-ARDL) model. The dataset combines quarterly data from the World Bank and national statistical agencies, including indicators such as tourism revenue, international arrivals, government effectiveness, and education expenditure (used as a proxy for income equality). The results indicate that tourism revenue (TOU) has a significant and positive long-run effect on income equality (0.14%). In the short run, the squared term of tourism revenue (TOU2) becomes significant and positive (0.01%), but the findings do not support the Kuznets curve hypothesis. Furthermore, the number of international travelers (TRAV) has a negative and significant effect in the long run, while government effectiveness (GE) is negative and significant in both the long and short run. A key limitation of the study lies in the use of education expenditure as a proxy for income equality, due to the unavailability of consistent inequality metrics across the GCC countries.

Keywords: equality; tourism; Kuznets; GCC; diversification; development; CS-ARDL (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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