Tourism entrepreneurship’s role in the economic and sustainable growth of emerging economies: Econometric approach (case study of Algeria, 1998–2024)

Abstract

This study investigates the contribution of tourism entrepreneurship to sustainable development in developing economies, with a specific focus on Algeria. From a statistical point of view, constructing an index to measure sustainable development is challenging. Although the human development index (HDI) and global sustainable development index (SDG) remain the most relevant benchmarking tools, this study—given the Algerian context—focuses on the impacts on investment, unemployment, and value-added creation. Using a vector error correction model (VECM), we examined the causal relationships between tourism entrepreneurship and sustainable development through key variables: investment in the tourism sector, tourism incomes, and unemployment. Obtained results indicate a positive and significant impact in long-term relationship, with weak contribution, both investment, and tourism receipts improving SDG. However, elasticities are minimal. In short-term relationship, there are mixed and sometimes counterintuitive signs. Unemployment hurts, but past unemployment appears to help SDG (possibly a statistical artifact). Overall, the study supports a modest positive role for tourism entrepreneurship, but model limitations reduce confidence. Despite its positive contribution to Algeria’s economic growth, tourism entrepreneurship still accounts for only a small share of the economy—averaging less than 2%—particularly following the COVID-19 crisis. This underscores the need for a long-term strategic overhaul to address the structural issues hindering investment in this sector.