The effect of tourist congestion on the health of the host community with an emphasis on Iran

Document Type : Research Paper

Authors

1 Master graduated in Economics, University of Mazandaran, Mazandaran, Babolsar

2 Professor of Economics, Faculty of Economic and Administrative Sciences, University of Mazandaran, Mazandaran

Abstract

Introduction: Tourism is a social, cultural and economic phenomenon that plays a vital role in the economic and social development of many countries. The tourism phenomenon has a special direct and indirect relationship with different aspects of human life. Inbound tourism has a positive effect on the economy of destinations by affecting the income of the residents, creating jobs, attracting investment, and increasing the demand for local goods. However, the development of tourism in a destination can lead to some negative aspects, which can cause serious problems after it becomes an established activity. Increasing health expenditures, as an indicator of the health status of communities, is one of the negative effects of tourism. In recent years, tourism and health expenditures have considerably grown in most countries. The GDP per capita is one of the important factors to determine the amount of health expenses. In the tourism literature, few studies have investigated the effect of inbound tourism on the health status of residents. Since there is no consensus on the effects of inbound tourism on the health of the host community, this study aims to investigate the effects of the tourist congestion, carbon dioxide emissions per capita and GDP per capita on health expenditures per capita. To this end, the non-linear relationship between the GDP per capita and the dependent variable is taken into account.
Methodology: In this study, the Generalized Method of Moments (GMM) was used to investigate the effects of tourist congestion, GDP per capita and carbon dioxide emissions on the health expenditures per capita in 30 OIC and oil-exporting countries. These countries were selected based on the maximum available data during the period of 2004-2018. To estimate the model, the index of the ratio of inbound tourism to the population of the host community was used for the tourist congestion variable. The GMM econometric method was used owing to its ability to solve the problems of possible endogeneity, autocorrelation and heteroskedasticity in the variables. In this study, the cross-sectional dependence was examined by Pesaran’s cross-sectional dependence test (2004), and the stationarity of the variables was checked by Pesaran’s unit root test (2007). The cointegration between the variables was also checked by the Pedroni cointegration test and the Kao cointegration test. The validity of the instruments was assessed by the Sargan test, and the lack of correlation of the second order and the general validity of the estimation was investigated by the Arellano-Bond test and the Wald test, respectively. The data of this study were obtained from the World Bank Database and analyzed with the Eviews 12 software.
Results and Discussion: Based on the results of Pesaran’s unit root test, the variables of GDP per capita and health expenditure per capita were non-stationary at level. Moreover, the results of the the Pedroni cointegration test, the Kao cointegration test and the unit root test on the model residual term showed that the estimate was not spurious. The results of estimating the research model with the GMM method showed that the variables were statistically significant at the significance level of 1%. The variables of carbon dioxide emission per capita and logarithm of tourist congestion had a negative and significant effect on health and caused an increase in health expenditures. The GDP per capita variable had a nonlinear inverted U-shaped relationship with health expenditure. According to this finding, the increase in the GDP per capita after reaching the maximum point was 43405 international dollars, reducing the health expenditures. After the maximum point, the increase of GDP per capita is expected to make investing in the infrastructure of the health sector possible and provide easier access to health services. Therefore, it can be expected that the increase in GDP per capita will eventually lead to the improvement of the health status of the society. The results of the Sargan test and the Arellano-Band test confirmed the efficiency of the used tool and the lack of correlation of the second order residual. The Wald test also confirmed the validity of the results of the estimated model.
Conclusion: Based on the results of this study, an increase in GDP per capita before reaching the maximum point causes an increase in health expenditures. After reaching the turning point, however, it reduces the health expenditures per capita. Since the per capita GDP of some countries, including Iran, has a significant distance from the maximum point, there is a good opportunity to achieve the downward range of the inverted U in smaller amounts of per capita GDP by investing in health infrastructure. Therefore, before reaching this point, it is recommended to allocate a part of the tax revenue from the top income deciles to investment in the health sector in order to improve the health of the society. Furthermore, in order to reduce the pollution caused by the GDP of polluting industries, the government should adopt policies to prevent environmental damages from directly endangering the health of people. Also, for the reduction of the adverse effect of tourism on health, a tax is suggested to be collected from incoming tourists. Moreover, it is recommended to include environmental and occupational health methods in the design, construction and utilization of tourism industry facilities. It is also suggested that a part of foreign exchange income from the tax on inbound tourists be allocated to the monitoring, control and prevention of epidemic diseases as well as research on diseases and occupational hazards related to the tourism industry. Finally, it is suggested to create a system for registering disease outbreaks in the tourist population and evaluate the disease burden attributed to tourism.

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The Journal of Economic Policy
Volume 14, Issue 28
March 2023
Pages 183-216

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