Addressing Socioeconomic Challenges in Developing Asia: The Role of International Tourism, Financial Development, Trade Openess, and Capital Formation in Economic Growth

The developing Asia is struggling to overcome the socioeconomic challenges imposed by higher unemployment, a less developed local economy, a struggle to preserve local culture, and a lack of focus on sustainable development. The prosperity in international tourism (ITR), financial development (FINDEV), trade openness (TO), and gross capital formation (GROSSC) plays a pivotal role in shaping the socioeconomic landscape of developing Asia. The study analyzes the impact of ITR, FINDEV, TO, and GROSSCF on economic growth (EGRs), working with a sample of 11 developing Asian nations for the period 1996-2020. The Pesaran CD-test, CADF-test, CIPS-test, and Westerlund cointegration tests are performed before doing the regression analysis. The study employed the Panel Corrected Standard Errors (PCSE) and the Feasible Generalized Least Squares (FGLS) estimators to examine the impact of ITR, FINDEV, TO, GROSSCF, and EGRs. The study results reveal that an increase in ITR (β1 = 0.004, p < 0.05) stimulates EGRs. This suggests that ITR offers direct, indirect, and multilayer benefits to the economy. The findings also show that FINDEV favorably affects (β2 = 0.209, p < 0.01) economic prosperity. Likewise, TO can foster (β3 = 0.076, p < 0.05) economic prosperity in developing nations. Finally, the results demonstrated that GROSSCF also fosters (β4 = 0.048, p < 0.05) EGRs in developing Asian nations. This study offers new insight into how ITR, FINDEV, TO, and GROSSCF affect economic prosperity and explain their socioeconomic impact within the context of developing Asian countries. Results support the fact that the prosperity in ITR generates foreign exchange earnings and employment opportunities, which uplift the standard of living of marginalized groups such as women and rural communities by reducing poverty; FINDEV enhances access to credit and investment, empowering small businesses and entrepreneurs to participate in economic activities that boost inclusive growth; TO offers global markets, encourage competition, innovation, and transfer of technology; GROSSCF, through investments in infrastructure, education, and technology improves connectivity, productivity, and resilience. Hence, these factors collectively reduce socioeconomic challenges by supporting infrastructure development, expanding opportunities for marginalized populations, and promoting long-term economic stability across the region.