Effect of the touristic product prices and costs on the international competitiveness: a comparative panel data analysis

Abstract

Purpose- Tourism is an important sector for countries across the world which develops the fastests and contributes to country's economy. The countries in the tourism market are in a serious competition due to its contribution to the economic development. Therefore are countries increasing their international competitiveness by the price and cost advantage of the touristic products they offer in order to obtain a greater share of the international tourism market. Methodology- In the study are the effects of the price and cost advantages on the tourism incomes determined by utilizing the data of 31 European stakeholder countries in the tourism sector for 2000-2014. The harmonized index of consumer prices, representing the price and cost advantage and established by the European Commission’s (EC) Economic and Financial Affairs Council (ECOFIN) with 5 indicators based on the real effective Exchange rate, and the unit labour cost series are utilized. Findings- The co-integration and causality relation between these series and the tourism income series of the current period are examined by the Kao (1999) panel co-integration and the Dumitrescu and Hurlin (2012) panel causality analysis. Conclusion- As a result of the conducted analysis, it is determined that there is a co-integration between the price-cost advantage and the tourism revenues, and that the price-cost advantage is a statistically meaningful reason for the tourism revenues.