The Role of Innovation on Tourism Income in D8 Group Countries

In today’s world, tourism is the industry of the century and has a progressive perspective. An industry with high potential in creating new jobs which has a significant role in economic growth and reducing poverty and it is always pointed that tourism can generate income and save developing countries from having single product economy. Meanwhile the sustainability of the industry and its revenue and finding an appropriate model to represent the factors affecting the tourism income are of great concern. Among all the factors which have been considered in previous papers in this field, the innovation has been neglected while it is a key driver in all tourism-related sectors to survive and grow especially in the industries with the aspect of competitiveness. The innovation can increase the revenue by building competitive advantage and positively affecting the competitiveness and enhancing the productivity. So this study focuses on the effect of the innovation on tourism income in D8 Islamic countries in the period 2010 - 2017. The results confirm the positive and statistically significant effect of innovation on tourism income and considering it in the model, even the other factors such as governance index, real exchange rate and trade openness can be dropped out of the model and yet, keeping GDP and infrastructures in the equation, the final model to estimate the tourism income is obtained.