The effectiveness of the legal system and inbound tourism

Abstract

This paper investigates the impacts of the effectiveness of the legal system and protection of the property rights on tourism development using a panel data of 152 countries over the period 1995-2015. The paper considers the fixed-effects, Hausman-Taylor (HT), and system generalized method of moments (GMM) estimations and the results demonstrate that a higher level of legal system quality and better protection of property rights promote inbound tourism. Specifically, the results show that higher judicial independence and better enforcement of contracts enhance the development of tourism. The benchmark results are robust to focus on the different groups of countries and measures for tourism development as well as to exclude the outlier observations.