Nonlinear impact of environmental pollution on international tourism, the role of institutional quality, economic complexity, trade, and exchange rates: evidence from G7 and E7 nations

This study, to the best of our knowledge and understanding, is the first to explore the impact of environmental quality on international inbound tourist arrivals. The heterogeneous panel sample set of E7 and G7 countries was considered, and the period of observations was based on annual frequency between 1995 and 2019. To account for endogeneity, the study also included control variables whose impact is in tune with the conventional findings. The empirical outcomes, based on robust estimation techniques, propose a "U" behavior between carbon emissions and international tourist arrivals and between suspended particulate matter and international tourist arrivals. Thus, after a certain rise in the pollution level threshold, international tourist inflows fell significantly in both sets of panel observations. However, this was more pronounced for the E7 countries. Our findings suggest some policy prescriptions that are crucial for sustainable development and the expansion of tourism.