The contribution of sustainable tourism in Nepal’s economic growth, employment paradoxes and policy pathways: a time-series analysis

Purpose This study examines how sustainable tourism in Nepal simultaneously supports economic growth and employment and while creating paradoxical pressures in fragile mountain economies. Drawing on tourism-led growth, tourism area lifecycle (TALC), seasonality and resilience perspectives, it uses time-series data to test whether higher tourist arrivals, longer stays and more bed capacity foster sustainable development or instead deepen inequality and ecological and seasonal stress. Design/methodology/approach Using annual time-series data (2000–2023), the analysis employs ARDL, ECM, OLS, Granger-causality and diagnostics check, complemented by review of the tourism policy-framework. Findings Tourism is a significant driver of economic growth, with a 1% increase in arrivals of tourist leading to a 1.54% increase in receipts. Similarly, a longer average visitor stay is linked with growth in hotel bed-capacity, consistent with TALC model. However, it reveals a critical employment paradox: extended tourist stays decrease seasonal mountaineering employment by 0.34%. Similarly, Granger-causality verifies that there is a one-way causal effect from stay duration to mountaineering activity. Research limitations/implications Nepal should focus on higher-value tourism, not only on more arrivals. At the same time, it should protect seasonal mountain jobs and manage ecological pressure with strong local monitoring and safety standards. Originality/value This research is derived from the novel incorporation of underutilized variables such as stay duration, bed capacity, seasonal employment data which link with tourism-led growth hypothesis (TLGH), TALC and resilience theory to coherent this paradox. Similarly, this study also provides actionable insights for policymakers aiming to enhance sustainable tourism development.