A1412
Title: Does economic strength or political and civil freedom improve international tourism? An econometric analysis
Authors: Amrutha Seshagiri - Indian Institute of Management Bangalore (IIMB) (India) [presenting]
Soudeep Deb - Indian Institute of Management Bangalore (India)
Tirthatanmoy Das - Indian Institute of Management Bangalore (India)
Abstract: Tourism is a key contributor to economic development of a country, playing a significant role in boosting GDP and generating employment. Understanding the determinants of tourism can provide valuable insights for policy planning and sectoral growth. An analysis examining inbound tourism in countries worldwide is presented that determines how countries' economic strength and freedom conditions influence their inbound tourism. A suitable regression modelling framework is adopted to capture the effects of these factors and the interplay between them, which helps determine whether they play substitutive or complementary roles in their influence on tourism demand. The causal relationship of these factors on inbound tourism is estimated through transfer entropy estimates based on Kullback Leibler divergence between the data series. Both economic strength of a country and its political freedoms and civil liberties are found to play a significant role in attracting international tourists, as both factors reduce non-pecuniary costs of travel for tourists through improved infrastructure and reduced risks. The elasticity of substitution between these two factors is examined, revealing that for most countries, economic strength and freedom conditions play a substitutive role once a minimum threshold of both levels is met. The findings provide significant insights for policymakers to manage tourism demand within their respective countries.
