Abstract
The aim of this research is to investigate the impact of major risks such as geopolitical and pandemic risks on tourism industry in selected countries of Asia-Pacific. The results were obtained using a sample of 10 neighboring countries in the period of 1996 to 2018. Diagnostic tests confirmed the existence of spatial interaction between model variables for these countries. According to the results, the economic growth, internally and in neighboring countries, leads to an increase in the influx of tourists. Whereas increased domestic prices will reduce the influx of domestic tourists, rising prices in neighboring countries intensify tourists’ arrival of the country. Furthermore, results reveal that domestic geopolitical and pandemic risks lead to a decrease in tourist arrivals. In addition, whereas pandemic risks in neighboring countries do not have a significant effect on tourist arrivals, geopolitical risks in neighboring countries lead to more domestic tourists’ arrival.
Highlights
The tourism arrivals using a conventional log-linear functional form can be expressed as a function of the logarithm of gross domestic product (GDP) per capita, the logarithm of the level of prices in the destination country, the logarithm of world pandemic uncertainty index, and the logarithm of geopolitical risks (GPRs) index
The Lagrange Multiplier (LM) and robust LM tests consider the possibility of the presence of spatial interaction effects in the different models using the residuals of a nonspatial model, with or without the spatial fixed effects
Diagnostic tests confirmed the spatial interaction between model variables and led to the selection of the spatial Durbin model with the spatial fixed effects
Summary
For the past few decades, the tourist industry in host countries is one of the main factors for economic development and has become a key sector of the economy and has direct and indirect economic benefits, which can be analyzed from the following perspectives: tourism’s inflow has a critical role in increasing the economic growth in many developing and developed countries; improving social welfare and important sources of government revenue and tax; attracting foreign direct investment inflow and international investment; creating new jobs and employment opportunities, and income transfer from developed countries to developing countries; has a positive impact on the income inequality; and reducing poverty (Stynes, 1997; Brida et al, 2008; Lee, 2009; Deller, 2010; Scheyvens and Russell, 2012; Fereidouni and Al-Mulali, 2014; Incera and Fernández, 2015; Parida et al, 2015). We can classify tourist risk as the natural disasters such as hurricanes, pandemics, earthquakes, floods, and tsunamis and as human-caused disasters such as terrorist, political instability, and pandemics diseases, which can significantly impact the flow of international tourists among countries. Glaesser (2006) shows that human-based disasters such as Impact of Pandemic Risk on Tourist Inflows political conflicts, geopolitical risks (GPRs), and terrorist attacks tend to have more profound effects than natural base disasters on tourism development, and GPRs refer to a measure of political tensions in a country and the economy as they serve as an important factor in tourism development as well. Because of the increasing political conflicts, the effect of GPRs on the tourism sector has received much attention in recent years. As GPRs have been experienced by many countries and nations in two decades, so the study in this topic is important and has been more concern by scholars (Snowberg et al, 2007; Caldara and Iacoviello, 2018; Blattman and Miguel, 2010; Aghion et al, 2019)
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