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

• Published date: 01 May 2021
• Author: Muhammad Meo,Solomon Nathaniel,Ghulam Shaikh,Anoop Kumar
• Date: 01 May 2021
• DOI: http://doi.org/10.1002/pa.2213

ACADEMIC PAPER

Energy consumption, institutional quality and tourist arrival in

Pakistan: Is the nexus (a)symmetric amidst structural breaks?

Muhammad Meo

1

| Solomon Nathaniel

2,3

| Ghulam Shaikh

4

| Anoop Kumar

5

1

The Superior College Lahore, Lahore, Pakistan

2

University of Lagos, Lagos, Nigeria

3

Lagos State University, School of Foundation,

Badagry, Lagos, Nigeria

4

Iqra University, Karachi, Pakistan

5

Department of Economics, Central University

of Andhra Pradesh, Ananthapuramu, Andhra

Pradesh, India

Correspondence

Solomon Nathaniel, University of Lagos,

Akoka, Lagos, Nigeria.

Email: nathaniel_solomon21@yahoo.com

Energy consumption is a prerequisite for economic growth especially in developing

countries, and its demand is expected to increases as population increases. The qual-

ity 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.

1|INTRODUCTION

Tourism can alleviate poverty and generate revenue for the govern-

ment. Countries try to reduce their unemployment rate by creating

more jobs, increase GDP, per capita income and export in order to

accumulate more taxes (Dogru & Sirakaya, 2016; Dogru & Sirakaya-

Turk, 2017; Is¸ık, Ada, & Boztoprak, 2016; Is¸ik & Radulescu, 2017).

Tourism contributed about 10.2% to the world's economy in 2016,

and 10% to job creation in the same year (Zhang & Liu, 2019). The

tourism sector plays a vital role in the development and growth of an

economy by creating new jobs, wages and eventually revenues to the

state for financing development and other projects (Choi & Sirakaya,

2005; Smeral, 2015). Since 1950, global travelling has increased by

more than 47 times from 25 million in 1950 to 1.19 billion in 2015. It

is expected to increase to 1.5 billion by the end of 2030. Moreover,

developing countries have experienced more growth (i.e., 31% in

1990 to 51% in 2012) in the share of international arrivals than devel-

oped countries (Lee & Chang, 2008).

Tourists from all over th e world consider severa l factors before

they plan a visit to any cou ntry. The most obvious may include

exchange rate, income, infrastructure, transportation costs, price dif-

ference, number of tourist points, local culture, population, literacy

rate, poverty level, econ omic growth, political s tability, terrorism,

tourism expenditures (TEs), energy consumption (EC) and institu-

tional quality (IQ; Nathaniel et al., 2019; Sinclair, 1998; Song &

Li, 2008; Lim, 1997; Witt, Witt, & Wilson, 1994; Crouch, 1994, 1996,

Yap & Saha, 2013 Morley, 1998). In spite of having various construc-

tive effects on the econ omy, the tourism sector al so contributes to

environmental pollut ion or to the emission of greenhouse gases as it

heavily relies on estab lished energy source s such as fossil fuel

(Becken, 2004; Gossling, 2000, Gössling, 2002; Scott, Peeters, &

Gössling, 2010). At present, greenhouse gases emission produced by

tourism sector globally add around 5.2% to 12.5%, while 72% is con-

tributed by automobile and aviation used in tourism-related activi-

ties and 21% by accommodation providers (United Nations

Environment Programme, 2016). The propensity is likely to increase

for the next two decades. Consequently, it is very important to put

into practice the guidelines, strategies and policies to reduce the

adverse effect of using t raditional sources of energy on the envir on-

ment (Adedoyin, Gumede, Be kun, Etokakpan, & Balsalo bre-

Lorente, 2020; Alola, Bekun, & Sarkodie, 2019; Balsalobre-Lorente,

Bekun, Etokakpan, & Driha, 2019; Bekun, Emir, & Sarkodie, 2019;

Emir & Bekun, 2019; Nathaniel, Anyanwu, & Shah, 2020; Nathaniel,

Barua, Hussain, & Adeleye, 2020; Nathaniel, Nwodo, Sharma, &

Shah, 2020) and follow the key doctrine of continuous tourism

growth.

Received: 7 April 2020 Revised: 4 May 2020 Accepted: 1 June 2020

DOI: 10.1002/pa.2213

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https://doi.org/10.1002/pa.2213