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Impacts of terrorism, governance structure, military expenditures and infrastructures upon tourism: empirical evidence from an emerging economy

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Abstract

Many countries are actively pursuing tourism-oriented policies to boost their economic growth. Tourism as an essential economic activity in most countries not only generates revenue but also develops infrastructures and creates jobs and investment opportunities. Several factors can affect the tourism activities of a country. This study investigates the impacts of terrorism, governance structure, military expenditures, and physical and ICT infrastructures upon tourism in an emerging economy, Pakistan. The ARDL bounds testing approach to cointegration is applied with data for the period of 2002Q1–2016Q4. The empirical results show that terrorism, military expenditures, and physical and ICT infrastructures have adverse impacts on tourism both in the short run and in the long run. The governance structure has a positive impact on tourism. Nevertheless this impact, as well as the impact of terrorism, is not significant. The findings from Johansen cointegration and dynamic ordinary least square approaches corroborate the results. This study proposes that governance structure, and physical and ICT infrastructures be improved to promote tourism activities. It is also suggested that more effective measures rather than mere military actions be taken to curtail terrorism and develop tourism. Detailed policy implications are also discussed.

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Fig. 1

Source: WorldBank (2017)

Fig. 2

Source: START (2017)

Fig. 3

Source: WorldBank (2017)

Fig. 4

Source: WorldBank (2016)

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Notes

  1. Although some past studies employed quarterly data (Kumar et al. 2016, 2019; Obradovic et al. 2017), yearly-based procedures can provide more efficient results than quarterly-based ones.

  2. The results of CUSUM, CUSUMq test and inverse roots of the characteristic equation associated with the ARDL are available from the author upon request.

  3. Since its independence in 1947, Pakistan only saw two democratic governments that had completed their 5-year electoral terms. Unfortunately, only one democratically elected president completed his electoral term in Pakistan, but even not a single Prime Minister succeeded to complete his five-year electoral term.

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Acknowledgements

We are grateful to Editor-in-Chief (Marco Vivarelli), two anonymous reviewers, and Prof. Dr. Muhammad Shahbaz (Beijing Institute of Technology, Beijing, China) and Dr. Fiza Qureshi (Institute of Business Administration, University of Sindh, Jamshoro, Pakistan) for their helpful comments and suggestions during the review process.

Funding

This research is supported by the National Natural Science Foundation of China (Project no. 71472172).

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Authors and Affiliations

  1. School of Management, University of Science and Technology of China, Hefei, Anhui, People’s Republic of China

    Muhammad Athar Nadeem, Zhiying Liu & Yi Xu

  2. University of Orléans, Orléans, France

    Kishwar Nawaz

  3. Institute of South–South Cooperation and Development, National School of Development, Peking University, Beijing, People’s Republic of China

    Muhammad Yousaf Malik

  4. School of Public Affairs, University of Science and Technology of China, Hefei, Anhui, People’s Republic of China

    Amna Younis

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Nadeem, M.A., Liu, Z., Xu, Y. et al. Impacts of terrorism, governance structure, military expenditures and infrastructures upon tourism: empirical evidence from an emerging economy. Eurasian Bus Rev 10, 185–206 (2020). https://doi.org/10.1007/s40821-020-00152-y

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