Exploring economic fitness and international tourism receipts: Insights from dynamic panel modeling in EU countries

Abstract

This study examines the impact of economic fitness (EF) on international tourism performance at the country level. Using a dynamic ordinary least squares regression, we analyze the effect of EF on tourism performance across 12 EU countries from 1990 to 2019. A novel database was constructed using indicators from the World Bank and the European Travel Commission. The findings reveal that EF positively influences tourism performance, measured by international tourism receipts. However, this long-run equilibrium effect is negatively moderated by the dispersion of tourists across sending continents. Additionally, the effect declines over time, suggesting that countries with more flexible and adaptive economies benefited from first-mover advantages in the earlier period. These findings underscore the strategic importance of EF for tourism policymakers. They highlight that a country’s ability to diversify and produce complex goods on a globally competitive scale serves as a strong foundation for sustainable growth in international tourism receipts.