The Impact of Political Instability on the Tourism Sector in the Middle East and North Africa

Abstract

This study uses fixed effects estimation to empirically model the effect of political instability on tourism to 15 MENA countries. My model reveals that acts of political violence, such as terrorist attacks, do not negatively impact tourism to the region. However, other facets of political instability, such as weak rule of law and frequent human rights abuses in a destination country, do negatively impact tourism to MENA nations. Furthermore, results for regressions using data only from countries located in the greater Levant and Arabian Gulf subregions confirm these findings; however, models that focus on Egypt, Algeria, Tunisia, and Morocco reveal that tourism demand in these North African nations reacts negatively to political violence. This study holds important implications for MENA policymakers and development planners, who must heed the corrosive impact of political instability on tourism, which contributes greatly to the economies of this region. Over the last 25 years, tourism sectors in the Middle East and North Africa (MENA) have greatly increased in size, constituting over nine percent of the region's gross domestic product (GDP) in 2016. Tourism's rising economic importance across MENA stems in part from growing governmental awareness of the diverse attractions that can draw travelers to their nations. As a result, petro-economies like Qatar and the United Arab Emirates have joined more traditional tourism economies, including Jordan, Egypt, Israel, and Tunisia, in placing tourism sector growth at the center of their development strategies. Beyond bolstering GDP growth across the region, increased international visitor flows have opened MENA's cultures to the world, a benefit that is not captured by national economic figures. Despite these successes, tourism development in MENA is challenged by frequent violence and political instability exacerbated by repressive authoritarian regimes, widespread corruption, and the destructive influence of civil wars and international invasions. Authoritarian crackdowns and increased terrorist-and regime-sponsored violence following the Arab Spring contributed to noticeable decreases in international arrivals across the region. Egypt, Syria, and other nations that slid into instability and violence during and after the uprisings of 2010-2012 were not the only countries to experience declines in tourism demand. In addition, lower international arrivals to countries like Jordan and Lebanon, where protests remained limited and largely nonviolent during this time period, imply that the negative impacts of violence, experienced by the central players of the Arab Spring spilled into peripheral countries in the region as well. While decreased tourism demand in individual countries during and after the Arab Spring implies a correlation between political instability and reduced visitor flows to these nations, an important question remains: to what extent do increases in political instability and violence explain fluctuations in international arrivals to the entire MENA region? This study answers this question through fixed-effects regression analysis of annual tourism and political instability data for Algeria,