The Impact Of Institutional Quality On Tourism In Mediterranean Eu Countries

Abstract

This research explores the impact of institutional quality on tourism development in a panel of nine Mediterranean countries within the European Union over the period from 1996 to 2021. Tourism development is evaluated using the number of tourist arrivals, with control variables such as GDP growth rate, inflation, higher education, quality of the environment, and trade, representing key determinants of tourism. Institutional quality is gauged using indicators of government effectiveness, political stability, regulatory quality, rule of law, and voice and accountability. The study utilizes the Fully Modified Ordinary Least Square (FMOLS) and Dynamic Ordinary Least Squares (DOLS) estimators to assess the influence of these determinants on tourism development. The findings demonstrate a positive correlation between institutional quality and tourism, providing valuable insights into the role of institutions in tourism management and their impact on the sector.