Do institutions matter for tourism spending?

Institutional frameworks are important for individuals’ attitudes and behaviours, and thus they are important for travel decisions. This study endeavours to examine the influence of various formal and informal institutional factors on tourism spending for a global sample of 120 countries from 2002 to 2019. Applying the two-step system generalised method of moments estimate, the results are robust and consistent. First, informal institutions, that is, colonial history, socialist history, origin of the legal system, religion and language, are important explanatory factors for differences in tourism spending between countries. Second, improvements in formal institutions appear to increase domestic tourism spending while they decrease outbound tourism spending. The results have important policy implications. JEL code: E02, Z30, Z32.