Tourism-Led Growth and its Sustainability Challenges: Evidence from Pakistan

Abstract

This current study aims at establishing how tourism development affects economic growth as well as creation of jobs in Pakistan and analyzing the environmental and infrastructural impacts that come with development of tourism with a sustainable tourism paradigm. Tourism has got high recognition as a driver of economic growth, where tourism earns income and creates jobs through increased spending on lodging, transport, food, and recreation. However, an increased pace of tourism growth in developing economies may trigger the deterioration of the environment and excessive load on the infrastructure, which is why the importance of sustainable interventions in the policy should be emphasized. Using annual time series data between the years 1995 and today, the study utilizes the Autoregressive Distributed Lag (ARDL) unit root tests, error correction modelling and bounds tests in estimating both short and long run interdependencies of tourism activity, gross domestic product and employment. It is also possible to evaluate the performance of policy at different times of governance with the use of temporal segmentation. This study portrays a two-sided effect of tourism as it leads to economic development, provision of employment opportunities; at the same time it also leads to environmental degradation and inefficient infrastructural facilities. The effectiveness of policy interventions varies with time. Durable growth is impossible without integrated sustainable tourism policies with environmental protection and development of infrastructure and cultural preservation as the top priority.