Implications of Oil Price Fluctuations for Tourism Receipts: The Case of Oil Exporting Countries

Siamand Hesami,Bezhan Rustamov,Wing-Keung Wong,Husam Rjoub

doi:10.3390/en13174349

Abstract

This study investigates the influence of oil prices on tourism income in countries that heavily relied on crude oil exports from 2000 to 2017. We found that oil prices and tourism receipts are cointegrated, revealing the existence of their long-run equilibrium relationship. Another significant finding to emerge from this study is the presence of a unidirectional Granger causality that runs from the oil prices to the tourism receipts. The results of the current study are of particular importance for policymakers who operate in oil-exporting countries. The implications provide a systematic understanding of the effect of oil price fluctuations on tourism income which can benefit investors greatly by enabling them to hedge against oil price fluctuations and plan for their tourism business and policymakers by enabling them to set policies to stabilize oil price fluctuations and plan for tourism development, correspondingly.

Highlights

It is a well-known fact that oil-exporting countries, the developing economies in the Middle East and North Africa (MENA), are exposed to fluctuations in oil prices
The objective of this paper is to conduct a preliminary analysis of the effects of oil prices on tourism income in countries that heavily rely on crude oil exports
This section has attempted to briefly introduce the effects of oil prices on tourism income in countries that heavily rely on crude oil exports

Summary

Introduction

It is a well-known fact that oil-exporting countries, the developing economies in the Middle East and North Africa (MENA), are exposed to fluctuations in oil prices. The sustained drop in oil prices in 2014 dramatically shifted the economic direction of the world’s major oil exporters, forcing them to reform their economies in an attempt to be prepared for the post-oil era. Tourism is among the most capable segments of an economy that can create added value, increase investment, and promote sustainable growth. The tourism industry can stimulate foreign trade, increase accessibility to global markets, and boost foreign direct investments, all of which lead to economic development. Considering the oil price-intensive nature of the tourism industry [1] and the high dependency of MENA countries on oil export revenues, the relationship between oil prices and tourist income remains a crucial topic of research

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Conclusion