AI Article Synopsis

  • The paper explores the relationship between corruption and tourism, proposing an inverted U-shape, where tourism benefits from low corruption but declines with high levels.
  • Using a threshold regression model on data from 83 countries between 2001 and 2018, the authors find that a simple linear model is inadequate to explain this relationship.
  • Results indicate that while low corruption positively influences tourism demand, high corruption negatively affects it, revealing a complex interaction with other socio-economic factors.

Article Abstract

Unlabelled: The relationship between corruption and tourism has been sporadically examined over the years. According to the existing theory, there is an inverted U relationship which implies that tourism demand initially increases as corruption increases (greasing the wheels) and after a certain threshold level of corruption, tourism demand decreases (sanding the wheels). Empirical studies so far concentrated on capturing the nonlinear relationship, by applying a simple linear model and by including corruption as a quadratic term. In the current paper, the authors revisit the "greasing and sanding the wheels" hypothesis by applying an advanced econometric technique, the threshold regression model, which deals with a key element of model uncertainty, namely parameter heterogeneity. In particular, using a sample of 83 countries from 2001 to 2018, the authors firstly examine if there is a nonlinear relationship between corruption and tourism, and then, they estimate the threshold value of corruption. According to the results, the null hypothesis of a linear model against the alternative of a threshold model with two regimes is strongly rejected. Furthermore, while the effect of corruption on tourism is positive in the low corruption regime and negative in the high corruption regime, a heterogeneous relationship is also found between other politico-socio-economic variables and tourism demand in the low and high corruption regimes.

Supplementary Information: The online version contains supplementary material available at 10.1007/s00181-021-02193-2.

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Source
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC8819199PMC
http://dx.doi.org/10.1007/s00181-021-02193-2DOI Listing

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