Exploring governance effectiveness, tourism development and poverty reduction relationship in SAARC countries using panel dynamic estimation

PurposeThe present study aims to examine the moderating impact of governance quality on the tourism poverty nexus using a panel of six South Asian Association for Regional Cooperation (SAARC) countries during the period 2002 to 2019.Design/methodology/approachFor the soundness of the results, fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) econometric models were applied to determine the long-run relationship.FindingsThe findings confirmed the positive and significant impact of tourism development (international tourism arrival) and governance quality (effectiveness of governmental services) on poverty (per capita household consumption) reduction. Interestingly results confirm that governance quality and tourism development have complementary impacts on poverty reduction.Originality/valueThe present study has twofold contributions; First, despite the high potential of SAARC tourism, research remains limited in studies examining the role of tourism and governance quality on poverty reduction within the SAARC region. As a result, the present paper presents critical insights into the impact of tourism inflow and governance quality on poverty reduction in South Asian countries. Second, to the best of the author's knowledge, this is the first attempt to conduct an econometric analysis to examine the role of governance quality on the relationship between tourism inflow and poverty reduction in SAARC countries.