This research analyzes, for the first time, the linkage among the gathered dataset of globalization indicators, the total factor productivity index and tourism development in a panel of 25 European countries during the 1995–2016 period.
The Generalized Method of Moments estimator for panel Vector Autoregressive Regression model is implemented and as a robustness test, the panel Granger causality test is used.
The findings have divulged that globalization and total factor productivity increase tourism development. An increase in the economic globalization de factor indicator will cause an increase in tourism development in European countries. Moreover, an increase in the social globalization de jure indicator will lead to a higher level of tourism development in European countries.
Policy-makers should use the complementary association between globalization and international tourism to promote productivity in European countries. These countries can also utilize the tourism sector as a tool to enhance the connectivity of their economies and societies with other parts of the world.
We use for the first time the globalization index as proposed by Gygli et al. (2019) in the tourism discipline. We evaluate the total factor productivity index instead of the economic growth applied by the majority of the researchers and we employ for the first time in the tourism field the GMM–PVAR framework.
