A panel data analysis of the effect of corruption on tourism

Marie Poprawe

Applied Economics, 2015, vol. 47, issue 23, 2399-2412

Abstract: This study empirically tests the hypothesis that corruption has a negative effect on tourism. Having to pay bribes while on holiday or a business trip increases the costs of travelling to a country where corruption is prevalent. Tourists are thus more likely to travel to countries where these additional costs do not need to be incurred. This hypothesis is tested using a panel data set of over 100 countries and 16 years. The results indicate that a 1-point increase in the Corruption Perception Index (implying a decrease in corruption) results in a 2% to 7% increase in tourist inflows. In addition, tourist inflows rise with GDP per capita, openness and growth and are higher in countries with a temperate climate.

Date: 2015
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DOI: 10.1080/00036846.2015.1005874

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