Tourism can be measured as an invisible trading item which leads to have more production, employment and improve the richness of a country. In recent years, spending on travel and tourism has become a fast growing part of world total gross, the study on leisure and recreation thus attract much attention. The purpose of this thesis is to test whether tourist arrivals to Taiwan are affected by partner country’s per capita GDP, industry ratio of total GDP, and distance between two countries.
Based on the results of the benchmark model, we conclude that tourist arrivals are positively related to per capita GDP and industry ratio of GDP, but negatively related to distance. Furthermore, more variables such as bilateral total trade, population, and exchange rate are added to the estimation. To provide a further analysis, sensitivity analyses and information criteria are employed to investigate how robust the results are.
Based on the estimation results, Models (6), (7), and (8) with the smallest values of AIC and BIC are preferred. According to the result shown in Table 6, a country with higher per capita GDP would have more tourist arrivals to Taiwan. All the coefficients of distance are negative, which indicates that origin countries of tourist arrivals are tending to be Taiwan’s neighboring countries. The coefficients of percentage of industry value-added to total GDP are positive except for Model (6), which means that Taiwan attracts more tourists from higher industrialized countries.
All the coefficients of bilateral trade value are positive, indicating that a closer trade partner with Taiwan would lead to have more tourist arrivals to Taiwan.
To provide a comparison of the estimations, this thesis analyzes the determination of tourist arrivals for different purpose. According to the result in Table 9, TP and BZ have the same coefficient sign for per capita GDP and distance, which is consistent with the benchmark model. The expected signs of coefficients of
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population are ambiguous: negative for TP but positive for BZ. The coefficients of industry value for BZ do not have certain signs, which means that the business stays might not be associated with the industry value directly. All the coefficients of bilateral trade value are positive, indicating that increasing trade flows would lead to have more TP and BZ tourism flows to Taiwan.
The coefficient estimates of selected year country dummies for the past two decades are illustrated in Table 10. The effects of Asian financial crisis are negative for TP but positive for BZ, which means that Asian financial crisis did lead to the shrinking of pleasure tourism, but increase business stays during the same period relatively. According the result, the 921 earthquake only reduced TP, but the outbreak of SARS (Y2003) deferred both TP and BZ. Business stays are decreasing after relaxing the restriction on Chinese tourists, and the effect on pleasure tourists is not significant.
The coefficient estimates of tourist-origin country effects of TP and BZ are shown in Table 11. The results do not support the argument that statistically there exists the substitution effect between Chinese and Japanese tourists after 2008. The business tourists from major trade partners of Taiwan such as Germany and United States are relatively more than other countries. On the other hand, business tourists from trade competitors of Taiwan are less than other countries.
Due to lack of data, this thesis does not have balanced tourism data, for example, the data for China only includes 2008-2013, Vietnam for 2012-2013, and Russia for 2010-2013. In the future research, we may collect multilateral tourism data to estimate the bilateral tourism flows between China and Taiwan. A data set with more countries and years may also be needed for the further study. On the selection of explanatory variables, service value-added to total GDP should instead replace the industry value-added to total GDP. And, the exchange rate should be
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converted to the exchange rate of local currency to New Taiwan Dollar, which would capture relative price of the tourist origin countries to Taiwan.
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