Do Country Risks Matter for Tourism Development? International Evidence

This research fills the gap in the tourism literature on the impacts of country stability-including political, financial, and economic-on tourism development (i.e., international tourist arrivals, international tourism revenues, and travel and leisure sector returns). To account for possible asymmetric and nonlinear relationships among variables, we apply a new method of moment quantile regression, by using panel data from 106 countries spanning the period 2006-2017. From a global perspective, the empirical results indicate that higher country stability generally leads to higher tourism development, while there is no salient influence of financial stability on travel and leisure sector returns. This suggests that the effects of country risk ratings are mostly nonlinear across different tourism development quantiles. Additionally, different components of risk rating scores have diverse impacts on tourism development. The findings mean that policy makers should consider their tourism condition when setting country stability strategies.