Terrorism and tourism demand: a case study of Lebanon, Turkey and Israel

Abstract

Using a seemingly unrelated regression (SUR) model, this paper examines the impact of domestic and transnational terrorism on tourism demand (as measured by visitor arrivals) to Lebanon, Turkey and Israel. The distinguishing feature of this paper is that we use a dynamic framework that takes into account (i) the intensity of terrorism and (ii) the associated spillover effects. The empirical results, based on monthly data from 1995 to 2007, reveal that terrorism in one country affects visitor arrivals not only to that country but also to other countries. We find that tourists view Lebanese and Turkish tourism markets as substitutes. Terrorism in Israel, of all types (i.e. domestic or transnational) and intensities, affects visitor arrivals to Lebanon and Turkey. In overall terms, terrorism has a much larger negative impact on visitor arrivals to Lebanon.

Keywords:

• transnational and domestic terrorism
• tourism
• visitor arrivals
• spillover effect
• seemingly unrelated regression

JEL Classification:

• C12
• C13
• C22
• L83
• N15

ORCID

Sajid Anwar http://orcid.org/0000-0001-9087-1309

Notes

1 The psychocentric group is focused on themselves and allocentric group is attracted to exploring other people and cultures around them. The former group is attracted to level low physical activities (Morakabati & Kapuściński, 2016).

2 In the case of tourism reliant economies, terrorism affects economic growth directly as well as indirectly. The direct effect arises from damage to production infrastructure. The indirect effect arises from the adverse effect of terrorism on tourism. Using a unique dataset, Abadie and Gardeazabal (2008) have shown that an increase in the risk of terrorism can also lead to a large decrease in net foreign direct investment, which can have a negative impact on economic growth.

3 Groups such as Action Directe in France, Red Brigades in Italy, November 17 in Greece, Red Army Faction in Germany, Symbionese Liberation Army in the United States of America, Revolutionary Armed Forces in Colombia and Japanese Red Army.

4 In the 1980s, Sikhs sought a religious state in the Punjab (India) resulting in the invasion of the sacred Golden Temple in 1984. Soon after, the Indian Prime Minister Indira Ghandi was assassinated by her Sikh bodyguards.

5 Israeli Prime Minister Rabin was assassinated in 1995 by a Jewish fundamentalist.

6 Using data on 127 countries over the 1970–2007 period, Choi (2015) argues that economic growth can contribute to a decrease in both domestic and international terrorism.

7 Foot and mouth epidemic is an epidemic that took place in the United Kingdom and killed cattle and sheep.

8 Syria, which shares the same tourism market with Israel and Lebanon, was not included in this study because data on visitor arrivals are not available.

9 International arrivals to Israel and Turkey are best represented by an additive decomposition, while total arrivals to Lebanon were best represented by a multiplicative decomposition.

10 Over the 1995–2007 period, seven attacks (2 in Lebanon, 2 in Israel and 3 in Turkey), as reported in GTD (2013), were targeted at tourists. As the attacks targeting tourists may have a different impact on visitor arrivals, we re-estimated our model considering only the seven attacks. The estimated results, not reported here to conserve space, were found to be statistically insignificant. These results are available from the authors upon request. Exclusion of a subset of data, which can also result in sample selection bias, may have influenced the statistical significance of the tests. The impact of the selected attacks on tourist arrivals can perhaps be best captured using the daily data, which is currently unavailable.

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