The effect of prosperity on international tourism expenditure

Abstract

Purpose

This paper aims to investigate prosperity–international tourism expenditure nexus to discover the prosperity sub-indices which affect tourism expenditure.

Design/methodology/approach

Using annual panel data for the sample period between 2009-2013 on 98 countries, this study implements a two-stage least squares estimation method with fixed effects specification in a panel regression analysis to find the relationships between international tourism expenditure and prosperity sub-indices.

Findings

The estimation results reveal a statistically significant relationship between the tourism expenditures of the citizens and prosperity, when prosperity is measured using its sub-indices, including Entrepreneurship and Opportunities, Government Efficiency, Education, Health, Safety and Security, Personal Freedom, Social Capital and Economy of the country. Education, Safety and Security and Health are the most significant factors which affect tourism expenditures of the country of origin.

Practical implications

To decrease the money outflow, policymakers may have plans to improve health infrastructure and, at the same time, increase quality of education and access to education in the country. Tourism policies which do not consider these prosperity sub-indices as explanatory variables may make mistakes in controlling actual tourism expenditures.

Originality/value

The paper’s originality lies in using new independent variables (prosperity sub-indices) in estimating tourism expenditure by using an appropriate panel data approach that deals with endogeneity problems.

Citation

Sokhanvar, A., Aghaei, I. and Aker, Ş. (2018), "The effect of prosperity on international tourism expenditure", Tourism Review, Vol. 73 No. 1, pp. 44-54. https://doi.org/10.1108/TR-07-2017-0108