Economic and Political Dynamics of Tourism Development in South Asia: Institutions, Interests and Growth Benefits

Abstract

This empirical work examines the dynamic nexus between tourism expansion and economic development, focusing on institutional systems in six South Asian states. It means that these countries have distinct political systems, so an analysis will need to be nuanced to understand the economic importance of tourism development. The paper studies the role of political and institutional frameworks in the economic impacts of tourism across six countries: India, Pakistan, Bangladesh, Nepal, Sri Lanka, and the Maldives. The study investigates the relationship between tourism expenditure and GDP per capita for the period 1995–2020 using the ARDL (Autoregressive Distributed Lag) approach.

Time series analysis methods are used to estimate the impacts of political stability and governance quality on tourism's economic development. The result indicates that countries with robust institutions and stable politics stand to gain more from tourism's economic benefits. On the negative side, economies such as the tourism sector are likely to struggle in countries marked by political unrest and poor governance. Underexistence:  In such environments, the potential of tourism has been significantly underutilised or frustrated by corruption, lack of policy coherence, and unreliable regulation.

This study confirms the importance of sound institutions in shaping tourism as a sector that contributes to long-run economic growth. Good governance, in terms of proper regulation and an anti-corruption drive, indeed helps tourism contribute more to nation-building. All those with relatively stable political systems and institutional integrity can optimise the economic gains from tourism, leading to future growth and development. At the same time, nations that are reckoning with poor governance, conflicts, and political vulnerability face significant challenges in fully capitalising on tourism's advantages.

The study concludes that the way forward to realise the economic potential of tourism in South Asia is to reinforce institutional approaches and regional cooperation. “Improved governance and better regulatory environments will allow tourism to become a catalyst for growth in this region, helping generate employment, restore livelihoods and stimulate local economies,” said Rifai.