The impact of economic and social factors on tourism demand for ASEAN-4 countries

Abstract

For the past decades, tourism has become one of the key growth sectors in ASEAN and has proven resilient during economic challenges globally. Due to the economic importance of the tourism industry, this study examines the relationship between tourism demand of ASEAN-4 countries and exchange rate, income level, relative price and substitute relative price by using static panel data. This study also looks into the impact of social factors such as political stability and corruption on tourism demand for ASEAN-4 countries. Based on Hausman test statistic, fixed effect estimator model is preferred. Robustness checking is applied to solve for autocorrelation and heteroskedasticity problems. The results showed that exchange rate, income level, relative price and substitute relative price have expected sign following economic theory. As expected, both the political stability and corruption level have positive impact on the number of tourist arrivals to the ASEAN-4 countries while terrorism did not have the expected negative impact. While leprosy has a significant impact on the number of tourist arrivals, surprisingly, the finding found that malaria does not have a significant impact on the number of tourist arrivals to the ASEAN-4 countries.