Revisiting the tourism-growth nexus: evidence from a new index for the market diversification of tourist arrivals

Abstract

This paper introduces the first index for the market diversification of tourist arrivals. Using this new index, we revisit the tourism-growth nexus for eight countries in the Mediterranean region: Egypt, France, Greece, Italy, Morocco, Spain, Tunisia, and Turkey. For this purpose, we run the individual Granger and the panel data non-Granger causality tests for the period from 1995 to 2014. We find the causality from market diversification to economic growth in Egypt and Greece and observe the causality from economic growth to market diversification in France, Morocco, and Turkey. We also find bidirectional causality in Italy, Spain, and Tunisia.

Keywords:

• tourist arrivals
• market diversification
• economic growth
• most-visited countries
• Granger-causality test procedure

JEL Classification:

• Z32
• Z38
• C23

Acknowledgments

We thank the World Tourism Organization staffs for providing us the comparable cross-country data for tourist arrivals. We express our gratitude to two anonymous reviewers for their valuable comments and suggestions, which substantially improved the contents of the manuscript.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 The Herfindahl–Hirschman index measures a country’s market diversification of exporting countries. For the details of the index, visit http://wits.worldbank.org/WITS/docs/TradeOutcomes-UserManual.pdf.

2 For instance, the political instability and turmoil known as the Arab Spring in Middle Eastern countries; the internal conflicts in Iraq and Syria, which also led to the refugee problem and the migration policy uncertainty in the European Union countries, the Balkans, and Central and Eastern Europe, especially in Turkey; the sovereign debt crisis in Greece, Italy, Portugal, and Spain; and the terror attacks in Belgium, France, and Turkey.

3 In addition, oil price fluctuations can negatively affect the number of tourist arrivals in a country (Chan, Lim, & McAleer 2005).

4 Other studies have also adopted different economic techniques to analyse the relationship between tourism and growth (e.g., Belloumi, 2010; Chen & Chiou-Wei, 2009; Cortés-Jiménez, Nowak, & Sahli, 2011; Dritsakis, 2012; Gozgor, 2015; Katircioglu, 2009; Kim, Chen, & Jang, 2006; Oh, 2005; Payne & Mervar, 2010; Tang & Abosedra, 2014; Tang & Tan, 2013 and 2015).

5 Note that our index simply shows whether a country receives tourists from countries with each of them equally. It may not be a robust indicator of a broad partnership, if the number of countries is too low.

6 Thus, if a country receives tourists from only a single country, the value of the index cannot be calculated (see Equation (1)).

7 The different number of partner markets is related to the data availability of the Tourism Statistics Database of the UNWTO. In addition, the indexes are calculated with 172, 21, 53, 77, 53, and 99 partner markets in Egypt, France, Greece, Italy, Tunisia, and Turkey, respectively.

8 The data cover the period from 1997 to 2014 in Spain.

9 The dataset starts in 1995 since the cross-country data for the tourist arrivals are just available from 1995 in the Tourism Statistics Database.

10 See, Table 2 for other causality test procedures in the literature.

11 See, Dumitrescu and Hurlin (2012) for details of the test procedure.