Health Tourism Catalyst for Growth in Developing Nations

Abstract

The present study aims to examine the effects of health tourism in fostering economic growth in developing nations with the theoretical base of the Health Tourism-Led Growth hypothesis. Apart from health tourism revenue, infrastructure investment, exchange rate, trade openness, educational capital, and population growth rate are considered as explanatory variables. Panel data for the period of 2009–2022 for 10 selected developing nations are considered. This research employs a two-stage analytical framework, namely, panel mean group auto-regressive distributed lag (PMG-ARDL) for the pre-pandemic period and trend analysis for the post-pandemic period. The findings highlight that health tourism, investment in infrastructure, and trade openness promote economic growth, whereas the exchange rate, growth rate, and educational capital are negatively significant to economic growth. The trend analysis underscores the pandemic's disruptive impact, evidenced by a contraction in GDP, investment in infrastructure, health tourism revenue, educational capital, and trade openness during the crisis, succeeded by a steady recovery, whereas the population growth rate remains stable. The robustness of the findings is confirmed with the Random Effect model. This study significantly contributes to academic literature and policy discourse by analysing the impact of health tourism on economic growth in developing nations, an underexplored area of research. From the policy standpoint, the study recommends fostering health-tourism-driven growth by prioritising investments in healthcare infrastructure, digital technologies and streamlining regulations.