Modeling the Engel Curve for Sustainable Development: Strategies and Applications for the Income-Employment Nexus in South Asia

Author:Md. Mahmudul Hassan, Tareq Imam Zahid

Abstract:
This study investigates the relationship between national income and tourism expenditure, framed within the context of the Engel curve, for six South Asian nations with significant potential for Halal tourism: Bangladesh, India, Maldives, Nepal, Pakistan, and Sri Lanka. Utilizing a Generalized Least Squares (GLS) model on panel data from 2000 to 2024, we analyze the impact of GDP per capita on outbound tourism expenditure. Our findings indicate a positive and elastic income elasticity of tourism demand (0.989), signifying that tourism is a luxury good and that financial outlay on travel increases more than proportionally with income. The results underscore the critical opportunity for these countries to develop their Halal tourism sectors to capture a share of this elastic expenditure, thereby fostering economic diversification and employment generation. The study concludes with targeted policy recommendations aimed at leveraging this income-elastic demand for sustainable economic development.

Keywords:Engel Curve, Tourism Expenditure, Income Elasticity, Muslim-Friendly Tourism, Faith-Based Tourism, Employment, Generalized Least Squares, South Asia, Halal Economy, Economic Development.

DOI:10.46333/ijtc/14/2/8

International Journal of Trade & Commerce (Vol: 14 Issue:2)