Foreign Direct Investment and Tourism Development: A Theoretical and Empirical Review Robin Nunkoo and Boopen Seetanah INTRODUCTION Tourism is one of the most significant export sectors for several countries across the world. The United Nations World Tourism Organization (UNWTO) and World Travel and Tourism Council (WTTC) statistics indicate that tourism accounts for around 10 percent of the world’s gross domestic product (7.2 trillion USD) and supports more than 284 million jobs. It is predicted that tourism will grow at an annual rate of 4 per- cent over the next 10 years (UNWTO, 2016; WTTC, 2016). In view of the economic implications of tourism, many countries desire its expansion. Tourism has therefore become such a sector that few governments can afford to neglect. Tourism is a major contributor to economic development, gener- ates income and foreign exchange, creates new employment opportunities for local people, and helps diversify the local econ- omy. The tourism sector has also been con- sidered as a vehicle for preserving the environment, culture, and heritage of the host destination (see Bilen et al., 2017; Látková and Vogt, 2012; Nunkoo and Gursoy, 2012; Nunkoo and Ramkissoon, 2010a, 2010b, 2010c, 2011a, 2011b, 2012; Nunkoo and Smith, 2013; Nunkoo and So, 2016; Paramati et al., 2017; Ramkissoon and Nunkoo, 2011; Seetanah, 2011; Sinclair, 1998; Sinclair and Stabler, 2002, Yu et al., 2011; Zuo and Huang, 2017). Rural commu- nities experiencing economic decline and hardships have also adopted tourism as a new economic development strategy (Hashemi and Ghaffary, 2017; Látková and Vogt, 2012; Park et al., 2015; Tirado Ballesteros and Hernández Hernández, 2017; Wang and Pfister, 2008). In view of the eco- nomic, environmental, and sociocultural implications of tourism development, resi- dents often consider the sector as a way of strengthening the local economy and improv- ing their quality of life (Andriotis and Vaughan, 2003; Hao et al., 2011). The tour- ism industry therefore is an economic 33 BK-SAGE-COOPER_V1-180129-Chp33.indd 556 12/07/18 7:07 PM