Tourism Inflow Interlinkages with Merchandise Exports: An Augmented Gravity Analysis for the Pacific

Pralok Gupta (), Sanchita Basu Das (), Saarthak Sharma () and Ma. Veronica Domingo ()
Additional contact information
Pralok Gupta: Indian Institute of Foreign Trade
Sanchita Basu Das: Asian Development Bank
Saarthak Sharma: Commonwealth Secretariat, London
Ma. Veronica Domingo: Asian Development Bank

No 732, ADB Economics Working Paper Series from Asian Development Bank

Abstract: Pacific developing member countries (DMCs) depend heavily on international tourism, which can promote merchandise exports by reducing trade costs. This paper empirically analyzes tourist inflows as a determinant of merchandise exports for Pacific DMCs by deploying a gravity model technique. Other relevant variables that augment the model are trade agreements, language affinity, visa policies, etc. The paper finds that inbound tourism to Pacific DMCs significantly increases merchandise exports: a 1% increase in tourist inflows is associated with a 0.17% rise in merchandise exports in the region. This relationship is along expected lines, as international tourist arrivals can help reduce trade costs, increasing such exports. If international tourists come from countries with a shared language and that have formed an economic partnership through free trade agreements and easy visa policies, the increase is bigger. Based on the findings, the paper recommends that inbound tourism be used to develop other industries such as garments or souvenir-related manufacturing in countries in the region. These products hold good export potential, provided they can be customized to the tastes and preferences of international tourists.

Keywords: tourism; international trade; Pacific developing member countries (search for similar items in EconPapers)
JEL-codes: C33 F14 L83 Z38 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2024-06-28
New Economics Papers: this item is included in nep-int, nep-sea and nep-tur
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.adb.org/publications/tourism-inflow-in ... -merchandise-exports Full text (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:0732

Access Statistics for this paper

More papers in ADB Economics Working Paper Series from Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines. Contact information at EDIRC.
Bibliographic data for series maintained by Orlee Velarde ().