Empirical analysis of interaction between promotion expenditures and tourism the case of Turkey

Abstract

The Turkish tourism sector is among the first places in international markets in terms of number of visiting tourists. But the same situation is not valid in terms of tourism revenue. At this point, tourism promotion becomes important for the Turkish economy. The Ministry of Culture and Tourism arranges promotional activities in different regions of the world to increase the number of tourists and revenue of tourism sector. But it is possible to interpret that tourism demand is not sufficient compare to potential of the country because of absence of effective and planned promotion policy. The aim of this study is to test interaction between tourism promotion expenditures, tourism revenue and number of tourists by employing recently developed Vector Autoregressive based Toda–Yamamoto and conventional Granger causality methods. In the study, annual data belonging to period between years 1990 and 2012 is used. Results of the empirical analyses give evidences about the relation between tourism promotion expenditures, tourism revenue and number of tourists. Findings obtained from both conventional Granger and Toda – Yamamoto causality tests imply that there is a causation linkage running from tourism promotion expenditures to number of tourists visiting Turkey. Results also indicate that there is no causal relationship between tourism promotion expenditures and tourism revenue. Keywords: Tourism, tourism demand, promotion expenditure, tourism income JEL Classification: C22,L83,Z33