Is Spain benefiting from the Arab Spring? On the impact of terrorism on a tourist competitor country

Abstract

The Arab Spring uprising has caused a large decrease in tourism figures in Middle East countries. At the same time, other Mediterranean competitor countries are seeing an increase in the amount of inbound tourism after being perceived as “safer destination”. Therefore, there might be some cross-country substitution effects of tourism in the Mediterranean area, as a consequence of the Arab Spring. In the present research, a novel hypothesis in tourism economic literature is tested: we explore whether a higher frequency of occurrence of terrorist incidents in one country diverts tourists to a competitor market. Therefore, evaluating the effect of the Arab Spring on tourist arrivals in Spain is an interesting case study. The empirical analysis uses monthly data on terrorist attacks in MENA regions and tourist arrivals in Spanish regions for the period 2000–2015. Extensive unit root and cointegration analyses are carried out and the results suggest there is no evidence of a long-run stable relationship between terrorist attacks in the MENA region and tourist arrivals in Spain. However, when a subsample is considered for the period when instability and terrorist attacks increase in the MENA region (2008–2015) the results point towards a stable long-run positive relationship between terrorism and tourist arrivals in Spain for total arrivals in the country and all the Spanish regions considered, except Catalonia. Consequently, it is concluded that the Arab Spring and rise of violence in the area has diverted tourists from the MENA region to Spain, although this effect could be transitory and it might vanish when terrorism and geopolitical tensions disappear in the region.