Institutional quality, financial development and tourism market diversification in OECD and non-OECD countries: A panel quantile approach

This study examines the determinants of tourism market diversification in 70 OECD and non-OECD countries, while considering the roles of institutional quality and financial development. A model of tourism diversification is developed using the novel method of moment quantile regression and estimated using data span of 24 years. The results show that improved institutional quality, financial development and an increase in average income of visitors lead to an increase in tourism market diversification in the full sample, OECD countries, and non-OECD countries. Increases in infrastructural facilities lead to lower tourism market diversification in the full sample and non-OECD countries, while generating more tourism market diversification in OECD countries. The results further indicate that appreciation of the local currency generates an increase in market diversification in non-OECD countries but a decrease in tourism market diversification in the OECD countries.