Energy consumption, institutional quality and tourist arrival in Pakistan: Is the nexus (a)symmetric amidst structural breaks?

Energy consumption is a prerequisite for economic growth especially in developing countries, and its demand is expected to increases as population increases. The quality of institutions is also germane for tourism development, as weak institutions may discourage the arrival of tourists into a country. This study examines the asymmetric impact of energy consumption (EC) and institutional quality (IQ) on tourist arrival (TA) in Pakistan for the period 1984-2017 by employing the non-linear autoregressive distributive lag model. The bounds test result reveals a long-run relationship among the variables used in the model. The findings of the study suggest an asymmetric relationship among EC, IQ and TA. The results imply that an improvement in IQ will increase TA. From the results, it can be said that reducing environmental pollution by switching into clean sources of energy may have an indirect positive effect on the tourism industry. Therefore, policies for enhancing TA, quality institutions and curtailing environmental degradation were suggested.

Automated summary

Energy consumption and institutional quality have significant impacts on tourism development, and there is an asymmetric relationship between them and tourist arrivals. Improving institutional quality can increase tourist arrivals, while switching to clean energy sources can indirectly promote the tourism industry.