IDEAS home Printed from https://ideas.repec.org/a/pal/buseco/v59y2024i2d10.1057_s11369-024-00355-5.html
   My bibliography  Save this article

Effects of tourism and institutional quality on infrastructural development in Africa: new evidence from the system GMM technique

Author

Listed:
  • Obed I. Ojonta

    (University of Nigeria)

  • Jonathan E. Ogbuabor

    (University of Nigeria)

Abstract

This study investigated how infrastructural development is responding to international tourism and institutional quality in Africa using the system GMM technique and a panel of 31 African economies from 2011 to 2020. Existing studies have generally ignored these relationships. We find that international tourism is an essential driver of infrastructural development in Africa. We also find that the quality of governance institutions significantly promotes infrastructural development in Africa when measured using government effectiveness, rule of law, and regulatory quality, but remain muted when measured using control of corruption, voice and accountability, and political stability. We highlighted the implications of these findings in terms of diversifying the economies of Africa through investments in tourism and reforming the governance institutions in the region to combat corruption, entrench transparent and accountable governance, and promote political stability. Interestingly, our findings further indicate that human capital development, GDP per capita, and remittances are important drivers of infrastructural development in Africa, while the role of foreign direct investment remained significantly negative. We provided policy recommendations based on these findings.

Suggested Citation

  • Obed I. Ojonta & Jonathan E. Ogbuabor, 2024. "Effects of tourism and institutional quality on infrastructural development in Africa: new evidence from the system GMM technique," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 59(2), pages 101-117, April.
    • Handle: RePEc:pal:buseco:v:59:y:2024:i:2:d:10.1057_s11369-024-00355-5
    DOI: 10.1057/s11369-024-00355-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s11369-024-00355-5
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s11369-024-00355-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Samira Roudi & Huseyin Arasli & Seyi Saint Akadiri, 2019. "New insights into an old issue – examining the influence of tourism on economic growth: evidence from selected small island developing states," Current Issues in Tourism, Taylor & Francis Journals, vol. 22(11), pages 1280-1300, July.
    2. World Bank, 2021. "The World Bank Annual Report 2021 [Rapport Annuel 2021]," World Bank Publications - Books, The World Bank Group, number 36067.
    3. Brice Kamguia & Manuella Ndjakwa & Sosson Tadadjeu, 2023. "Does infrastructural development foster export upgrading in Africa?," African Development Review, African Development Bank, vol. 35(1), pages 79-94, March.
    4. Simplice A. Asongu & Nicholas M. Odhiambo, 2020. "The role of governance in quality education in sub-Saharan Africa," Working Papers of the African Governance and Development Institute. 20/077, African Governance and Development Institute..
    5. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    6. Siba, Eyerusalem G., 2008. "Determinants of Institutional Quality in Sub-Saharan African Countries," Working Papers in Economics 310, University of Gothenburg, Department of Economics.
    7. Rana Ejaz Ali Khan & Muhammad Kamran Rasheed, 2016. "Political Economy of Tourism in Pakistan: The Role of Terrorism and Infrastructure Development," Asian Development Policy Review, Asian Economic and Social Society, vol. 4(2), pages 42-50.
    8. Petros Lathiras & Costas Siriopoulos, 1998. "The Demand for Tourism to Greece: A Cointegration Approach," Tourism Economics, , vol. 4(2), pages 171-185, June.
    9. Rana Ejaz Ali Khan & Muhammad Kamran Rasheed, 2016. "Political Economy of Tourism in Pakistan: The Role of Terrorism and Infrastructure Development," Asian Development Policy Review, Asian Economic and Social Society, vol. 4(2), pages 42-50, June.
    10. Jacint Balaguer & Manuel Cantavella-Jorda, 2002. "Tourism as a long-run economic growth factor: the Spanish case," Applied Economics, Taylor & Francis Journals, vol. 34(7), pages 877-884.
    11. Elvira da Costa Ribeiro & Bing Wang, 2020. "Tourism Led Growth Hypothesis: Has the Tourism industry an impact on The Economic Growth of Sao Tome and Principe?," International Journal of Economics and Financial Issues, Econjournals, vol. 10(1), pages 180-185.
    12. Oliver E. Ogbonna & Jonathan E. Ogbuabor & Afamefuna A. Eze & Walter O. Ugwuoke, 2021. "Moderating Effect of Institutional Quality on Relationship Between Foreign Aid and Economic Growth in Africa," Politická ekonomie, Prague University of Economics and Business, vol. 2021(4), pages 457-478.
    13. Sakib Amin & Foqoruddin Al Kabir & Ainy Nihad & Farhan Khan, 2020. "An Empirical Investigation between Foreign Direct Investment (FDI) and Tourism in Bangladesh," Journal of Tourism Management Research, Conscientia Beam, vol. 7(1), pages 110-121.
    14. Agénor, Pierre-Richard, 2010. "A theory of infrastructure-led development," Journal of Economic Dynamics and Control, Elsevier, vol. 34(5), pages 932-950, May.
    15. Tajudeen Egbetunde & Anthony Enisan Akinlo, 2015. "Financial Globalization and Economic Growth in Sub-Saharan Africa: Evidence from Panel Cointegration Tests," African Development Review, African Development Bank, vol. 27(3), pages 187-198, September.
    16. Ifeoma Christy Mba & Emmanuel Ikechukwu Mba & Jonathan Emenike Ogbuabor & Winnie Ogochukwu Arazu, 2019. "Causes and Terrain of Oil Spillage in Niger Delta Region of Nigeria: The Analysis of Variance Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 9(2), pages 283-287.
    17. Ogbaro, Eyitayo O., 2019. "Threshold Effects of Institutional Quality in the Infrastructure-Growth Nexus," Journal of Quantitative Methods, University of Management and Technology, Lahore, Pakistan, vol. 3(2), pages 45-61.
    18. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    19. Muhammad Asif Khan & József Popp & Mirza Nouman Ali Talib & Zoltán Lakner & Muhammad Atif Khan & Judit Oláh, 2020. "Asymmetric Impact of Institutional Quality on Tourism Inflows Among Selected Asian Pacific Countries," Sustainability, MDPI, vol. 12(3), pages 1-16, February.
    20. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    21. Christine Lim & Michael McAleer, 2000. "A seasonal analysis of Asian tourist arrivals to Australia," Applied Economics, Taylor & Francis Journals, vol. 32(4), pages 499-509.
    22. Stephen R. Bond, 2002. "Dynamic panel data models: a guide to micro data methods and practice," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 1(2), pages 141-162, August.
    23. Davidmac O. Ekeocha & Jonathan E. Ogbuabor & Anthony Orji, 2022. "Public infrastructural development and economic performance in Africa: a new evidence from panel data analysis," Economic Change and Restructuring, Springer, vol. 55(2), pages 931-950, May.
    24. John Dunning, 2001. "The Eclectic (OLI) Paradigm of International Production: Past, Present and Future," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(2), pages 173-190.
    25. Stephen Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers 09/02, Institute for Fiscal Studies.
    26. Vasilis Sarafidis & Donald Robertson, 2009. "On the impact of error cross-sectional dependence in short dynamic panel estimation," Econometrics Journal, Royal Economic Society, vol. 12(1), pages 62-81, March.
    27. Osinubi, Tolulope Temilola & Osinubi , Olufemi Bankole, 2020. "Inclusive Growth in Tourism-led Growth Hypothesis: Evidence from Nigeria," African Journal of Economic Review, African Journal of Economic Review, vol. 8(2), July.
    28. Onyinye I. Anthony-Orji & Anthony Orji & Jonathan E. Ogbuabor & Lucy C. Uka, 2023. "Money matters a lot: empirical analysis of financial development, financial inclusion and economic growth in Nigeria," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 17(1), pages 100-117.
    29. Mbiankeu Nguea, Stéphane & KAGUENDO, Ulrich Vianney Elisée, 2022. "Are growth effects of foreign capital significant for increasing access to electricity in Africa?," MPRA Paper 111604, University Library of Munich, Germany.
    30. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    31. Alegre, Joaquín & Garau, Jaume, 2009. "Tourist satisfaction indices. A critical approach," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 14, pages 5-26.
    32. Oliver E. Ogbonna & Jonathan E. Ogbuabor & Charles O. Manasseh & Davidmac O. Ekeocha, 2022. "Global uncertainty, economic governance institutions and foreign direct investment inflow in Africa," Economic Change and Restructuring, Springer, vol. 55(4), pages 2111-2136, November.
    33. Frees, Edward W., 1995. "Assessing cross-sectional correlation in panel data," Journal of Econometrics, Elsevier, vol. 69(2), pages 393-414, October.
    34. Ojonugwa Usman & Osama Elsalih & Osama Koshadh, 2020. "Environmental performance and tourism development in EU-28 Countries: the role of institutional quality," Current Issues in Tourism, Taylor & Francis Journals, vol. 23(17), pages 2103-2108, September.
    35. Mohammed Seid Hussen, 2023. "Institutional quality and economic growth in Sub-Saharan Africa: a panel data approach," Journal of Economics and Development, Emerald Group Publishing Limited, vol. 25(4), pages 332-348, August.
    36. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
    37. Stephen Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    38. Ogbuabor, Jonathan E. & Ukwueze, Ezebuilo R. & Mba, Ifeoma C. & Ojonta, Obed I. & Orji, Anthony, 2023. "The asymmetric impact of economic policy uncertainty on global retail energy markets: Are the markets responding to the fear of the unknown?," Applied Energy, Elsevier, vol. 334(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Obed I. Ojonta & Jonathan E. Ogbuabor, 2024. "Effects of international tourism on environmental quality and renewable energy use in Africa: a study of the moderating role of governance institutions," Economic Change and Restructuring, Springer, vol. 57(4), pages 1-37, August.
    2. Çoban, Serap & Topcu, Mert, 2013. "The nexus between financial development and energy consumption in the EU: A dynamic panel data analysis," Energy Economics, Elsevier, vol. 39(C), pages 81-88.
    3. Mohamed Mnasri & Georges Dionne & Jean-Pierre Gueyie, 2013. "The Maturity Structure of Corporate Hedging: the Case of the U.S. Oil and Gas Industry," Cahiers de recherche 1337, CIRPEE.
    4. Peñasco, Cristina & del Río, Pablo & Romero-Jordán, Desiderio, 2017. "Gas and electricity demand in Spanish manufacturing industries: An analysis using homogeneous and heterogeneous estimators," Utilities Policy, Elsevier, vol. 45(C), pages 45-60.
    5. Vogel, Johanna, 2013. "Regional Convergence in Europe: A Dynamic Heterogeneous Panel Approach," MPRA Paper 51794, University Library of Munich, Germany.
    6. Gülsüm Akarsu, 2017. "Analyzing the impact of oil price volatility on electricity demand: the case of Turkey," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 7(3), pages 371-388, December.
    7. Caporale, Guglielmo Maria & Sova, Anamaria Diana & Sova, Robert, 2022. "The direct and indirect effects of financial development on international trade: Evidence from the CEEC-6," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 78(C).
    8. Anwar Al-Gasaymeh & Miral R. Samarah, 2023. "Does Country Risk Affect Banking Efficiency: Empirical Evidence from Turkey and Selected Countries from the European Union," Global Business Review, International Management Institute, vol. 24(6), pages 1401-1417, December.
    9. Daher, Hassan & Masih, Mansur & Ibrahim, Mansor, 2015. "The unique risk exposures of Islamic banks’ capital buffers: A dynamic panel data analysis," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 36(C), pages 36-52.
    10. Florian Moussi-Beylie, 2023. "The trickle-down theory: a reality in French sports?," TEPP Working Paper 2023-04, TEPP.
    11. Ekene ThankGod Emeka & Jonathan E. Ogbuabor & Davidmac O. Ekeocha, 2024. "Terrorism and economic complexity in Africa: The unconditional impact of military expenditure," African Development Review, African Development Bank, vol. 36(1), pages 139-152, March.
    12. Dolton, Peter & Bondibene, Chiara Rosazza & Stops, Michael, 2015. "Identifying the employment effect of invoking and changing the minimum wage: A spatial analysis of the UK," Labour Economics, Elsevier, vol. 37(C), pages 54-76.
    13. Gagari Chakrabarti, 2022. "Openness and Potential Fragility of the Global Banking System," India Studies in Business and Economics, in: Supravat Bagli & Gagari Chakrabarti & Prithviraj Guha (ed.), Persistent and Emerging Challenges to Development, chapter 0, pages 351-370, Springer.
    14. Seho, Mirzet & Alaaabed, Alaa & Masih, Mansur, 2016. "Risk-Sharing Financing of Islamic Banks: Better Shielded Against Interest Rate Risk?," MPRA Paper 82558, University Library of Munich, Germany.
    15. Davidmac O. Ekeocha & Jonathan E. Ogbuabor & Patterson C. Ekeocha & Anthony Orji, 2023. "Analysis of Sectoral Outcomes and Institutional Quality Nexus in Sub-Saharan Africa," SAGE Open, , vol. 13(4), pages 21582440231, October.
    16. Tajik, Mohammad & Aliakbari, Saeideh & Ghalia, Thaana & Kaffash, Sepideh, 2015. "House prices and credit risk: Evidence from the United States," Economic Modelling, Elsevier, vol. 51(C), pages 123-135.
    17. Terence J. V. Saldanha & Abhishek Kathuria & Jiban Khuntia & Benn R. Konsynski, 2022. "Ghosts in the Machine: How Marketing and Human Capital Investments Enhance Customer Growth When Innovative Services Leverage Self-Service Technologies," Information Systems Research, INFORMS, vol. 33(1), pages 76-109, March.
    18. Bruno Emmanuel Ongo Nkoa & Cédric Meytang & Thierry Mamadou Asngar & Guivis Zeufack Nkemgha, 2024. "What Drives Life Insurance Development in Sub-Saharan Africa? The Role of Information and Communication Technology," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 6878-6907, June.
    19. Marta Spreafico, 2013. "Institutions, the resource curse and the transition economies: further evidence," DISCE - Quaderni del Dipartimento di Politica Economica ispe0064, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    20. Falavigna, Greta & Ippoliti, Roberto, 2023. "SMEs’ behavior under financial constraints: An empirical investigation on the legal environment and the substitution effect with tax arrears," The North American Journal of Economics and Finance, Elsevier, vol. 66(C).

    More about this item

    Keywords

    Tourism; Institutional quality; Infrastructural development; System GMM; Africa;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:buseco:v:59:y:2024:i:2:d:10.1057_s11369-024-00355-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.