The Role of Economic Development in Tourism Demand

Juan L. Eugenio-Martin, Noelia Martín-Morales and M. Thea Sinclair
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Juan L. Eugenio-Martin: Departamento de Análisis Económico Aplicado, Universidad de Las Palmas de Gran Canaria, Spain, and Department of Land Economy, University of Cambridge, 19 Silver Street, CB3 9EP, UK
Noelia Martín-Morales: Instituto Canario de Estadística, Las Palmas de Gran Canaria, Spain
M. Thea Sinclair: formerly Christel DeHaan Tourism and Travel Research Institute, University of Nottingham, UK

Tourism Economics, 2008, vol. 14, issue 4, 673-690

Abstract: This paper investigates the relevance of the supply-side characteristics of countries as determinants of the growth of tourism. Particular emphasis is placed on the role of economic development as a driver of tourism over time. Much of the literature on tourism has focused on the effects of tourism as an income generator. However, to attract tourists, it may be necessary to have a minimum threshold of economic development. This paper examines whether economic development is relevant to tourists' decision making. A cross-sectional time series model which deals with autocorrelation and heteroskedasticity in the error term is proposed. First, the model considers a worldwide panel data set of destination countries for tourists from Australia, France, Germany, Japan, Spain, the UK and the USA. Then, the sample is divided into smaller areas according to geographical and GDP criteria to investigate differences within competing countries in the same area. The results show that for the worldwide case, economic development matters and makes a difference to tourists' decision making. Subsample analysis shows that in those countries with high GDP levels, differences in economic development are not significant, whereas in developing countries they are.

Keywords: economic development; tourism demand; tourists' decisions; time series models; tourism competition (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:14:y:2008:i:4:p:673-690

DOI: 10.5367/000000008786440111

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