Determinants of Inbound Tourism in Pakistan: A GMM Based Analysis

The objective of the study is to examine the different factors that influenced inbound tourism in Pakistan by using a time series data from 1975-2017. The study employed Generalized Method of Moments (GMM) estimator that accounts possible endogeneity in the given set of regressors. The results confirmed the positive relationship between GDP per capita and inbound tourism, which further exhibit in the Granger causality approach where it’s verified the growth -led tourism hypothesis in a country. The results further show the feedback relationship between industrial value added and country’s per capita income while there is unidirectional causality running from industry value added to trade openness and FDI inflows to industrial value added in a country. The study conclude with the fact that country’s economic resources helpful to attract international tourists in order to spend their time in pleasure destinations, which is vital sign for Pakistan’s economy to attract more international tourists that helpful to receipt foreign exchange earnings for the country.