Assessing the role of ICT, governance, and infrastructure on inbound tourism demand in India

Abstract

PurposeThe main purpose of the present research is to explore the possible effectiveness of information and communication technology (ICT), infrastructure development, exchange rate and governance on inbound tourism demand using time series data in India.Design/methodology/approachThe stationarity of the variables is checked by using the ADF, PP and KPSS unit root tests. The paper uses the Bayer-Hanck and auto-regressive distributed lag (ARDL) bounds testing approach to cointegration to examine the existence of long-run relationships; the error-correction mechanism for the short-run dynamics and the vector error correction method (VECM) to test the direction of causality.FindingsThe findings of the research indicate the presence of cointegration among the variables. Further, long-run results indicate infrastructure development, word-of-mouth and ICT have a positive and significant linkage with international tourist arrivals in India. However, ICT has a positive and significant effect on tourist arrivals in the short run as well. The VECM results indicate long-run unidirectional causality from infrastructure, ICT, governance and exchange rate to tourist arrivals.Research limitations/implicationsThis study implies that inbound tourism demand in India can be augmented by improving infrastructure, governance quality and ICT penetration. For an emerging country like India, this may have far-reaching implications for sustaining and improving tourism sector growth.Originality/valueThis paper is the first of its kind to empirically examine the impact of ICT, infrastructure and governance quality in India using modern econometric techniques. Inbound tourism demand research aids government and policymakers in developing effective public policies that would reposition India to gain from a highly competitive global tourism industry.