This research delves into the correlation between institutional quality and tourism development in a panel of nine Mediterranean countries within the European Union spanning from 1996 to 2021. The study gauges tourism development by examining tourist arrivals, while considering GDP growth rate, inflation, higher education, environmental quality, and trade as control variables representing factors influencing tourism. Institutional quality is measured through indicators such as regulatory quality, rule of law, and control of corruption. Utilizing Fully Modified Ordinary Least Square (FMOLS) and Dynamic Ordinary Least Squares (DOLS) models, the study aims to quantify the impact of these factors on tourism development. The findings indicate a positive relationship between institutional quality and tourism, shedding light on the pivotal role of institutions in tourism management and their influence on the sector. These results have implications for shaping national development strategies.

Akram, S., Sultana, N., Sultana, T., et al. (2021). Country governance, tourism and environment quality: An emerging economy perspective. Management Science Letters, 11(6), 1737–1746. https://doi.org/10.5267/j.msl.2021.2.009

Alola, U. V., Alola, A. A., Avci, T., et al. (2019). Impact of Corruption and Insurgency on Tourism Performance: A Case of a Developing Country. International Journal of Hospitality & Tourism Administration, 22(4), 412–428. https://doi.org/10.1080/15256480.2019.1650686

Blundell, R., Bond, S., & Windmeijer, F. (2001). Estimation in dynamic panel data models: Improving on the performance of the standard GMM estimator. Emerald Group Publishing Limited. https://doi.org/10.1920/wp.ifs.2000.0012

Balli, F., Balli, H. O., & Jean Louis, R. (2016). The impacts of immigrants and institutions on bilateral tourism flows. Tourism Management, 52, 221–229. https://doi.org/10.1016/j.tourman.2015.06.021

Baltagi, B. H. (2021). Econometric Analysis of Panel Data. In Springer Texts in Business and Economics. Springer International Publishing. https://doi.org/10.1007/978-3-030-53953-5

Bilen, M., Yilanci, V., & Eryüzlü, H. (2015). Tourism development and economic growth: a panel Granger causality analysis in the frequency domain. Current Issues in Tourism, 20(1), 27–32. https://doi.org/10.1080/13683500.2015.1073231

Bilgili, F., Koçak, E., Bulut, Ü., et al. (2017). The impact of urbanization on energy intensity: Panel data evidence considering cross-sectional dependence and heterogeneity. Energy, 133, 242–256. https://doi.org/10.1016/j.energy.2017.05.121

Chen, C.-F., & Chiou-Wei, S. Z. (2009). Tourism expansion, tourism uncertainty and economic growth: New evidence from Taiwan and Korea. Tourism Management, 30(6), 812–818. https://doi.org/10.1016/j.tourman.2008.12.013

Cho, V. (2010). A study of the non‐economic determinants in tourism demand. International Journal of Tourism Research, 12(4), 307–320. Portico. https://doi.org/10.1002/jtr.749

Canh, N. P., & Thanh, S. D. (2020). Domestic tourism spending and economic vulnerability. Annals of Tourism Research, 85, 103063. https://doi.org/10.1016/j.annals.2020.103063

Cevik, S. (2022). Dirty Dance: Tourism and Environment. IMF Working Papers, 2022(178), 1. https://doi.org/10.5089/9798400220272.001

Davis, K. E., & Trebilcock, M. J. (2001). Legal reforms and development. Third World Quarterly, 22(1), 21–36. https://doi.org/10.1080/713701142

Das, J., & Dirienzo, C. (2010). Tourism Competitiveness and Corruption: A Cross-Country Analysis. Tourism Economics, 16(3), 477–492. https://doi.org/10.5367/000000010792278392

Danish, & Wang, Z. (2018). Dynamic relationship between tourism, economic growth, and environmental quality. Journal of Sustainable Tourism, 26(11), 1928–1943. https://doi.org/10.1080/09669582.2018.1526293

Das, J., & Dirienzo, C. (2010). Tourism Competitiveness and Corruption: A Cross-Country Analysis. Tourism Economics, 16(3), 477–492. https://doi.org/10.5367/000000010792278392

Dupeyras, A. & MacCallum, N. (2013). Indicators for Measuring Competitiveness in Tourism: A Guidance Document. OECD Tourism Papers.

EUROSTAT. (2021). Tourism statistics-nights spent at tourist accommodation establishments European Commission. Communication from the Commission to the European.

Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. (2021). Tourism and Transport from 2020 European Parliament (2021). Tourism.

Eugenio-Martin, J. L., & Campos-Soria, J. A. (2011). Income and the substitution pattern between domestic and international tourism demand. Applied Economics, 43(20), 2519–2531. https://doi.org/10.1080/00036840903299698

Fosse, J. (2021). The future of Mediterranean tourism in a (post) covid world. Eco-Union.

Ghalia, T. (2016). Essays on tourism and its determinants. Brunel University London.

Ghalia, T., Fidrmuc, J., Samargandi, N., et al. (2019). Institutional quality, political risk and tourism. Tourism Management Perspectives, 32, 100576. https://doi.org/10.1016/j.tmp.2019.100576

Garín-Mun¯oz, T. (2006). Inbound international tourism to Canary Islands: a dynamic panel data model. Tourism Management, 27(2), 281–291. https://doi.org/10.1016/j.tourman.2004.10.002

Garín Muñoz, T. (2007). German demand for tourism in Spain. Tourism Management, 28(1), 12–22. https://doi.org/10.1016/j.tourman.2005.07.020

Gupta, M. R., & Dutta, P. B. (2018). Tourism development, environmental pollution and economic growth: A theoretical analysis. The Journal of International Trade & Economic Development, 27(2), 125–144. https://doi.org/10.1080/09638199.2017.1346139

Hagemann, R. P. (1981). The determinants of household vacation travel: some empirical evidence. Applied Economics, 13(2), 225–234. https://doi.org/10.1080/00036848100000027

Hijman, R. (2009). The impact of the crisis on employment’, EUROSTAT Statistics in focus 79/2009. Office for Official Publications of the European Communities.

Hsiao, C. (2007). Panel data analysis—advantages and challenges. TEST, 16(1), 1–22. https://doi.org/10.1007/s11749-007-0046-x

Im, K S., Pesaran M., & Shin, Y. (2003) Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115(1), 53–7. https://doi.org/10.1016/S0304-4076(03)00092-7

Katircioglu, S., Gokmenoglu, K. K., & Eren, B. M. (2018). Testing the role of tourism development in ecological footprint quality: evidence from top 10 tourist destinations. Environmental Science and Pollution Research, 25(33), 33611–33619. https://doi.org/10.1007/s11356-018-3324-0

Kaufmann, D., Kraay, A., & Mastruzzi, M. (2010). The Worldwide Governance Indicators: Methodology and Analytical Issues. World Bank Policy Research Working Paper No. 5430.

Kim, S., & Kim, D. (2012). Does Government Make People Happy?: Exploring New Research Directions for Government’s Roles in Happiness. Journal of Happiness Studies, 13(5), 875–899. https://doi.org/10.1007/s10902-011-9296-0

Kulendran, N., & Wilson, K. (2000). Is there a relationship between international trade and international travel? Applied Economics, 32(8), 1001–1009. https://doi.org/10.1080/000368400322057

Khan, M. A., Popp, J., Talib, M. N. A., et al. (2020). Asymmetric Impact of Institutional Quality on Tourism Inflows Among Selected Asian Pacific Countries. Sustainability, 12(3), 1223. https://doi.org/10.3390/su12031223

Khan, R. E. A., Ahmad, T. I., & Haleem, J. (2021). The Governance and Tourism: A Case of Developing Countries. Asian Journal of Economic Modelling, 9(3), 199–213. https://doi.org/10.18488/journal.8.2021.93.199.213

Kulendran, N., & Wilson, K. (2000). Is there a relationship between international trade and international travel? Applied Economics, 32(8), 1001–1009. https://doi.org/10.1080/000368400322057

Leitao, N. C. (2010). Does trade help to explain tourism demand? The case of Portugal. Theoretical and Applied Economics, 17(3), 63-74.

Liu, H., & Song, H. (2017). New Evidence of Dynamic Links between Tourism and Economic Growth Based on Mixed-Frequency Granger Causality Tests. Journal of Travel Research, 57(7), 899–907. https://doi.org/10.1177/0047287517723531

Lee, S. (2015). Research Note: Quality of Government and Tourism Destination Competitiveness. Tourism Economics, 21(4), 881–888. https://doi.org/10.5367/te.2014.0377

Lee, H. S., Lee, S. Y., & Har, W. M. (2020). Roles of Institutional Quality on the Relationship between Tourism and Economic Development in Malaysia. Journal of Environmental Treatment Techniques, 8(1), 119-124.

Leitao, N. C. (2010). Does trade help to explain tourism demand? The case of Portugal. Theoretical and Applied Economics, 17(3), 63-74.

Mushtaq, R., Thoker, A. A., & Bhat, A. A. (2020). Does institutional quality affect tourism demand? Evidence from India. Journal of Hospitality and Tourism Insights, 4(5), 622–638. https://doi.org/10.1108/jhti-05-2020-0088

Nyasha, S. & Odhiambo, N. M. (2021). Determinants of tourism development: Empirical evidence from three developing countries. Economia Internazionale/International Economics, 74(3), 335-368.

Paramati, S. R., Shahbaz, M., & Alam, Md. S. (2017). Does tourism degrade environmental quality? A comparative study of Eastern and Western European Union. Transportation Research Part D: Transport and Environment, 50, 1–13. https://doi.org/10.1016/j.trd.2016.10.034

Peng, B., Song, H., & Crouch, G. I. (2014). A meta-analysis of international tourism demand forecasting and implications for practice. Tourism Management, 45, 181–193. https://doi.org/10.1016/j.tourman.2014.04.005

Poprawe, M. (2015). A panel data analysis of the effect of corruption on tourism. Applied Economics, 47(23), 2399–2412. https://doi.org/10.1080/00036846.2015.1005874

Popescu, I. (2012). Institutional quality: criteria, determinants and benefits. The Yearbook of the Gheorghe Zane Institute of Economic Researches, 21(1), 59-65.

Poprawe, M. (2015). A panel data analysis of the effect of corruption on tourism. Applied Economics, 47(23), 2399–2412. https://doi.org/10.1080/00036846.2015.1005874

Qiang, Q., & Jian, C. (2020). Natural resource endowment, institutional quality and China’s regional economic growth. Resources Policy, 66, 101644. https://doi.org/10.1016/j.resourpol.2020.101644

Raza, S. A., Sharif, A., Wong, W. K., et al. (2017). Tourism development and environmental degradation in the United States: evidence from wavelet-based analysis. Current Issues in Tourism, 20(16), 1768–1790. https://doi.org/10.1080/13683500.2016.1192587

Santana-Gallego, M., Ledesma-Rodríguez, F., & Pérez-Rodríguez, J. V. (2011). Tourism and trade in OECD countries. A dynamic heterogeneous panel data analysis. Empirical Economics, 41(2), 533–554. https://doi.org/10.1007/s00181-011-0477-9

Santana-Gallego, M., Rosselló-Nadal, J. & Fourie, J. (2016). The effects of terrorism, crime and corruption on tourism. Economic Research Southern Africa (ERSA), 595, 1-28.

Santana-Gallego, M., Ledesma-Rodríguez, F., & Pérez-Rodríguez, J. V. (2011). Tourism and trade in OECD countries. A dynamic heterogeneous panel data analysis. Empirical Economics, 41(2), 533–554. https://doi.org/10.1007/s00181-011-0477-9

Saha, S., & Yap, G. (2014). The Moderation Effects of Political Instability and Terrorism on Tourism Development. Journal of Travel Research, 53(4), 509–521. https://doi.org/10.1177/0047287513496472

Saha, S., & Yap, G. (2015). Corruption and Tourism: An Empirical Investigation in a Non‐linear Framework. International Journal of Tourism Research, 17(3), 272–281. Portico. https://doi.org/10.1002/jtr.1985

Shafiullah, M., Okafor, L. E., & Khalid, U. (2019). Determinants of international tourism demand: Evidence from Australian states and territories. Tourism Economics, 25(2), 274–296. https://doi.org/10.1177/1354816618800642

Sokhanvar, A. (2019). Does foreign direct investment accelerate tourism and economic growth within Europe? Tourism Management Perspectives, 29, 86–96. https://doi.org/10.1016/j.tmp.2018.10.005

Smeral, E. (1998). The impact of globalization on small and medium enterprises: new challenges for tourism policies in European countries. Tourism management, 19(4), s371-380.

Škrabić, B. (2009). Determinants of the development of the financial system of Central and Eastern European countries [Master’s thesis]. Faculty of Economics.

Škrabić Perić, B., Šimundić, B., Muštra, V., et al. (2021). The Role of UNESCO Cultural Heritage and Cultural Sector in Tourism Development: The Case of EU Countries. Sustainability, 13(10), 5473. https://doi.org/10.3390/su13105473

Turner, L. W., & Witt, S. F. (2001). Factors Influencing Demand for International Tourism: Tourism Demand Analysis Using Structural Equation Modelling, Revisited. Tourism Economics, 7(1), 21–38. https://doi.org/10.5367/000000001101297711

UNWTO. (2018). European Union Tourism Trends. UNWTO.

UNWTO. (2021). Tourism in the 2030 agenda. UNWTO.

UNWTO. (2021). International Tourism Highlights 2020 Edition. UNWTO.

Wang, Y.-S. (2009). The impact of crisis events and macroeconomic activity on Taiwan’s international inbound tourism demand. Tourism Management, 30(1), 75–82. https://doi.org/10.1016/j.tourman.2008.04.010

Webber, A. G. (2001). Exchange Rate Volatility and Cointegration in Tourism Demand. Journal of Travel Research, 39(4), 398–405. https://doi.org/10.1177/004728750103900406