The Influence of the Quality of Institutions on Tourism in the EU Countries

The present study aims to investigate the effect of the quality of institutions on tourism development in a panel of 27 countries from the European Union for the period of 2008-2021. The number of arrivals and employees in tourism measures tourism development. The control variables used, which also represent the determinants of tourism, are GDP growth rate per capita, inflation, higher education, quality of the environment, and trade. Quality of institutions indexes are constructed based on indicators of government effectiveness, political stability, regulatory quality, the rule of law, and voice and accountability. To estimate the impact of selected determinants in tourism development, we used the Generalized method of the moments-GMM model. According to the obtained results, it can be concluded that there is a positive connection between the quality of institutions and tourism. The results of this research should provide insight into the most important determinants of management and institutions and explain their influence on events in tourism. All of the above knowledge should be of interest to the management bodies in charge of creating national development strategies. The contribution of this research is reflected in the clarification of the importance of institutions' quality and monitoring. Previous research on this topic is generally limited to specific tourist regions or is based on smaller indicators. This paper covers the area of the European Union, with different stages of development and share in tourist traffic.