Investigating the influence of tourism on economic growth and carbon emissions: Evidence from panel analysis of the European Union

The study investigates the influence of tourism on economic growth and CO2 emissions. In the empirical analysis, unit root and cointegration tests using panel data of European Union countries from 1988 to 2009 are performed to examine the long-run equilibrium relationship among tourism, CO2 emissions, economic growth and foreign direct investment (FDI). Results from panel cointegration techniques and fixed-effects models indicate that a long-run equilibrium relationship exists among these variables. Furthermore, tourism, CO2 emissions and FDI have high significant positive effect on economic growth. Economic growth, in turn, shows a high significant positive impact on CO2 emissions while tourism and FDI incur a high significant negative impact on CO2 emissions.

► Tourism and FDI have high significant positive effect on economic growth in the EU. ► Economic growth shows a high significant positive effect on CO2 emissions in the EU. ► Tourism is inversely related to CO2 emissions in the EU. ► FDI incurs a high significant negative impact on CO2 emissions in the EU. ► A long-run equilibrium relationship exists among tourism, CO2 emissions, economic growth and FDI in the EU.