THE RELATIONSHIP BETWEEN POLITICAL RISK AND EMPLOYMENT IN TOURISM: A CASE OF SOUTH AFRICA

Abstract

Political risk is one of the determinants of employment in the tourism industry. Changes in the level of political risk in a country result in fluctuations in employment in the tourism sector. Countries with a high level of political risk experience a decline in employment whereas countries with a low level of political risk experience an increase in employment. This paper investigates the impact of political risk on employment in South Africa’s tourism industry using quarterly time series data for the period between 2007 and 2017. The study employs the Autoregressive Distribution Lag (ARDL) model to determine the impact of political risk on employment in tourism in both the short- and long-run. The results from the analysis reveal that political risk has both short- and long-run effects on employment in South Africa’s tourism industry. When the level of political risk declines by 1%, employment grows by 5.016% in the long-run whereas employment increases by 1.51% in the short-run when the level of political risk declines by 1%. These results imply that governments have to keep the level of political risk low by avoiding political risk events and actions for the tourism industry to create additional employment opportunities.