Globalization, Country Risks, and Trade in Tourism Services: Evidence from China

Wenwen Zhang,Yi-Bin Chiu

doi:10.3390/su12145869

Abstract

This study applies the autoregressive distributed lag (ARDL) model to examine the impacts of globalization and country risks on China’s tourism service trade over the period 1984–2015. The results reveal that in the long run, globalization has a significant negative impact on tourism service exports and tourism service trade balances, while a significant positive impact on tourism service imports. In the short run, globalization has a significant negative impact on tourism service imports, while a significant positive impact on tourism service exports and trade balances. Country stability could roughly mitigate these negative and positive impacts of globalization on tourism service trade in both the short and long run. Moreover, the speed of adjustment from the short run to long run equilibrium path is relatively fast. These results are important for China’s policy makers when formulating a strategy for the development of tourism service trade.

Highlights

Tourism has become one of the most important industries in the world and its economic impacts are vital for many countries [1,2]
This study looks to provide an empirical explanation for the relationships between tourism service trade, globalization, and country risks in China by using the autoregressive distributed lag (ARDL) model
We find that globalization has negative effects on the exports of tourism service trade, but positive effects on its imports, exacerbating the tourism service trade imbalances

Summary

Introduction

Tourism has become one of the most important industries in the world and its economic impacts are vital for many countries [1,2]. Tourism has been the most important sector in the service trade, accounting for about 25% of total international trade in services and ranking first in the world. China’s trade scale and status in the international tourism market have been remarkable in recent years. Before 2008, China’s tourism service trade, as one of the trades in service that exhibits a surplus in China, partly offset its trade deficit for many years, playing an important role in increasing foreign exchange income and balancing international payments [8]. China entered a deficit period of tourism foreign exchange income in 2009 and this deficit has continued to grow [7]. According to the Yearbook of China Tourism Statistics, the deficit in 2014 grew to US$113.6 billion, accounting for 57.7% of the service trade deficit. The tourism trade deficit has somewhat alleviated relations between China and other countries, but a long-term deficit will harm the interests of the country [8]

Methods

Results

Conclusion