Tourism and Economic Growth in the EU-27: Mechanisms, Heterogeneity, and Threshold Effects

This study revisits the tourism–economic growth nexus in the EU-27 over 2014–2024 by combining an integrative conceptual synthesis of transmission mechanisms with a multi-method empirical strategy. We move beyond a single fixed-effects regression by integrating: (i) a dynamic panel System Generalized Method of Moments (System GMM) estimator that addresses endogeneity and persistence in growth, (ii) interaction terms between tourism intensity and moderating factors (institutional quality, human capital, trade openness), (iii) sub-sample analyses across mature versus emerging tourism destinations and Mediterranean versus Continental economies, and (iv) a Hansen-type threshold model that identifies non-linearities in the tourism–growth relationship. The baseline fixed-effects results confirm a positive and statistically significant tourism elasticity, while the dynamic and threshold specifications reveal that this effect is highly heterogeneous: it is amplified in economies with stronger institutions and higher human capital, but becomes statistically indistinguishable from zero in destinations with very high tourism intensity, consistent with congestion and overtourism mechanisms. Evidence on heterogeneous post-pandemic resilience is treated as exploratory rather than as a confirmed empirical contribution, since the present specification relies on a COVID-19 dummy and sub-sample patterns rather than a dedicated COVID-19 interaction model. The findings reposition tourism not as a uniformly positive growth engine, but as a moderated and bounded driver whose contribution depends on absorptive capacity and management quality.