The Nature of Relationship between International Tourism and Trade: A Panel Data Perspective

Abstract

This research paper determines the international trade and tourism relationship of South and South East Asian Region countries for the period 1998-2009. The research study examines four variables in total including three independent trade variables i.e. imports, exports and total trade and one dependent tourism variable i.e. number of tourist arrivals. International trade variables have been measured in terms of current US $ and tourism variable has been measured in terms of US Growth Domestic Products (GDP) Deflator. A study of international trade and tourism relationship is done by using Restricted model of Ordinary Least Square Pooled Regression model, Unrestricted model of Fixed Effect Model (FEM), Random Effect Model (REM) and Co-integration has been checked by using Granger Causality test. The Pooled Restricted Ordinary Least Square model showed that imports and exports have a negative and positive significant relation with the tourism of South and South East Asian Region countries, respectively. Data become stationary at lag 3 then firstly, one way Causality runs was found from imports to tourists arrivals and secondly, exports to tourists arrivals. The study revealed that the imports and exports play a significant role in promoting tourism industry of South and South East Asian Region countries