Abstract

The aim of this paper is to study whether the origin of tourism, either domestic or foreign, has varying effects on poverty reduction. Therefore, the paper employs a Panel Autoregressive Distributed Lag (PARDL) model for 24 Peruvian departments from 2003 to 2022 to analyze that impact of tourism arrivals, both domestic and foreign, on poverty reduction. Despite the fact that on average, foreign tourism stays longer in a touristic destination than national tourism, our results show that domestic tourism contributes more significantly to poverty reduction than foreign tourism. This is primarily due to the higher volume of domestic tourist compared to international tourist. Additionally, our findings indicate that economic growth is the most influential variable in explaining poverty reduction; while the impact of public spending is relatively minor. In terms of policy implications, these findings highlight the importance of focusing on domestic tourism development in poverty reduction policies.