The Effects of Diminished Tourism Arrivals and Expenditures Caused by Terrorism and Political Unrest on the Kenyan Economy

Eric Tchouamou Njoya, Marina Efthymiou, Alexandros Nikitas and John F. O’Connell
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Eric Tchouamou Njoya: Huddersfield Business School, University of Huddersfield, Huddersfield HD1 3DH, UK
Marina Efthymiou: Business School, Dublin City University, Dublin D9, Ireland
Alexandros Nikitas: Huddersfield Business School, University of Huddersfield, Huddersfield HD1 3DH, UK
John F. O’Connell: Centre for Aviation Research, School of Hospitality and Tourism Management, University of Surrey, Guildford GU2 7XH, UK

Economies, 2022, vol. 10, issue 8, 1-20

Abstract: The economic development of many countries globally relies heavily on tourism arrivals and spending. Terrorist attacks, political unrest, and other external shocks create disruptions and imbalances that lead to tourism crises with devastating effects on a country’s economy. The paper quantitatively examines the wider economic impacts and welfare effects of a continued decrease in tourism revenues caused by terrorism and political instability on the Kenyan economy. We use a dynamic Computable General Equilibrium model which we calibrate to a 2003 Social Accounting Matrix for Kanya. Our results reveal that a decrease in tourism spending causes a contraction of the economy in the short-term and long-term. Tourism contraction leads to decreased output, prices and wages in urban households, whereas the rural households notice an increase in welfare in the short and medium-term and a decrease in the long-term. Diversification of the tourism product, better branding, crisis management preparations and emphasis on domestic tourism that is less affected by disruption are ways to safeguard tourism in Kenya and beyond.

Keywords: tourism; economy; external shocks; terrorism; political unrest (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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