Causality between Capital Investment in the Tourism Sector and Tourist Arrivals in ASEAN

  • Sakkarin NONTHAPOT Indo-China Country International Trade and Economic Research Sector, Faculty of Integrated Social Sciences, KhonKaen University, NongKhai Campus, Thailand

Abstract

This study investigates the causal relationship between capital investment in the tourism sector and international tourist arrivals to ASEAN countries. The study employs panel data which includes annual data from 10 countries over the period 1995 to 2016. The results reveal that between capital investment in the tourism sector and international tourist arrivals there is bi-directional long-run causality. ASEAN countries should increase the budget for the supporting tourism investment continuously and should target tourism promotion as an entire region.to attract international tourists to visit ASEAN and to encourage the expansion of tourism revenue.

References

[1] Asian Development Bank. 2005. The Greater Mekong Subregion tourism sector strategy. Asian Development Bank, Manila, Philippines.
[2] Asian Development Bank. 2008. Tourism sector in the Greater Mekong Subregion. Asian Development Bank, Manila, Philippines.
[3] Dwyer, L., and Forsyth, P. 1994. Foreign tourism investment: Motivation and impact. Annals of Tourism Research, 21(3), 512–537. DOI: 10.1016/0160-7383(94)90118-X.
[4] Dwyer, L., Frosyth, P., and Dwyer, W. 2011. Tourism economic and policy. Bristol: Channel View Publications.
[5] Eberhardt, M. 2011. Panel time-series modeling: New tools for analyzingxt data. Retrieved from http://repec.org/usug2011/UK11_Eberhardt.pdf.
[6] Endo, K. 2006. Foreign direct investment in tourism-flows and volumes. Tourism Management, 27(4), 600-614. DOI: 10.1016/j.tourman.2005.02.004.
[7] Engle, R.F., and Granger, C.J. 1987. Cointegration and error correction: Representation, estimation and testing. Econometrica, 55, 251 -276. DOI: 10.2307/1913236.
[8] Fereidouni, H.G., and AL-mulali, U. 2014. The interaction between tourism and FDI in real estate in OECD countries. Current Issues in Tourism, 17(2), 105-113. DOI: 10.1080/13683500.2012.733359.
[9] Geyikdagi, N. 1995. Investment in Tourism Development and the Demand forTravel. RivistaInternazionale di Scienze Economiche e Commerciali, 42, 391–403.
[10] Gutierrez, L. 2003. On the power of panel cointegration tests: A monte carlo comparison. Economics Letters, 80, 105-111.
[11] Judge, G.G., Griffiths, W.E., Hill, R.C., Lütkepohl, H., and Lee, T.C. 1985. Introduction to the Theory and Practice of Econometrics. (2 ed). New York: John Wiley & Sons.DOI: 10.1002/jae.3950050311.
[12] Kao, C. 1999. Spurious regression and residual-based tests for cointegration in panel data. Journal of Econometrics, 90, 1–44. DOI: 10.1016/S0304-4076(98)00023-2.
[13] Lee, C.C, and Chang, C.P. 2008. Tourism development and economic growth: A closer look at panels. Tourism Management, 29, 180-192. DOI: 10.1016/j.tourman.2007.02.013.
[14] Maddala, G.S., and S. Wu. 1999. A Comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics, 61, 631-52. DOI: 10.1111/1468-0084.0610s1631.
[15] Nonthapot, S. 2014. The Relationship between Tourism and Economic Development in the Greater Mekong Sub-Region: Panel Cointegration and Granger Causality. Journal of Advanced Research in Law and Economics, 5(1), 44-51.DOI: 10.14505/jarle.v5.1 (9).05.
[16] Nonthapot, and Wattchalaanun. 2015. Relationship between tourism expansion and telecommunication in Thailand. Journal of Environmental Management and Tourism, 6(1), 37-44. DOI: 10.14505/jemt.v6.1 (11).03.
[17] Pedroni, P. 1999. Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors. Oxford Bulletin Economics Statistics, 61, 653-678. DOI: 10.1111/1468-0084.61.s1.14.
[18] Pesaran, M.H. 2004. General diagnostic tests for cross section dependence in panels. University of Cambridge, Faculty of Economics, Cambridge Working Papers in Economics No.0435. DOI: 10.17863/CAM.5113.
[19] Sadi, M.A., and Henderson, J.C. 2001. Tourism and foreign direct investment in Vietnam. International Journal of Hospitality & Tourism Administration, 2(1), 67-90. DOI: 10.1300/J149v02n01_04.
[20] Samimi, A.J., Sadegh, S., and Sadeghi, S. 2013. The relationship between foreign direct investment and tourism development: evidence from developing countries. Institutions and Economies,5(2), 59-68.
[21] Selvanathan, S., Selvanathan, E.A., Viswanathan, B. 2012. Causality between Foreign Direct Investment and Tourism: Empirical Evidence from India. Tourism Analysis, 17(1), 91-98. DOI: 10.3727/108354212X13330406124296.
[22] Sinclair, M.T., and Stabler, M. 1997. The theory of tourism supply and its market structure. In the economics of tourism. New York: Routledge. DOI: 10.4324/9780203195437.ch4.
[23] The World Bank. 2017. International tourism, number of arrivals. Retrieved from http://data.worldbank.org/indicator/ST.INT.ARVL.
[24] World Travel and Tourism Council. 2017. Economic Impact Research. Retrieved from http://www.wttc.org/research/economic-data-search-tool.
Published
2018-09-04
How to Cite
NONTHAPOT, Sakkarin. Causality between Capital Investment in the Tourism Sector and Tourist Arrivals in ASEAN. Journal of Advanced Research in Law and Economics, [S.l.], v. 8, n. 8, p. 2504-2511, sep. 2018. ISSN 2068-696X. Available at: <https://journals.aserspublishing.eu/jarle/article/view/2215>. Date accessed: 16 aug. 2022. doi: https://doi.org/10.14505//jarle.v8.8(30).22.