Do Political Instability, Terrorism, and Corruption Have Deterring Effects on Tourism Development Even in the Presence of Unesco Heritage? A Cross-Country Panel Estimate

Abstract

This article evaluates the effects of political instability, terrorism, and corruption on tourism development, particularly UNESCO-listed heritage destinations. Using a fixed-effects panel data analysis for 139 countries over the period 1999–2009, the result reveals that a one-unit increase in political instability decreases tourist arrivals and tourism revenue between 24% and 31% and 30% and 36%, respectively. Furthermore, in the presence of heritage, terrorism has negative effects on tourism demand even though its effect is lower than that of political instability. However, the study shows that an increase in corruption index would not have an adverse influence on tourist arrival numbers, particularly for those countries that have historical and natural heritage. Perhaps, many experienced travelers have expectations that they would require paying bribes to corrupt authorities for travel visa or permits to some tourist destinations in order to make things accessible. Moderation effect results indicate that political instability reduces tourism demand even in UNESCO-listed heritage destinations.

Corruption and Tourism: An Empirical Investigation in a Non‐linear Framework

“…The study further explains that the marginal gain in tourism competitiveness from a reduction in corruption levels is greater for developing countries than for developed countries. On the other hand, Yap and Saha () found that an increase in corruption would not have an adverse effect on tourism demand for destinations that have historical and natural heritage. They argued that most travellers are expected to pay bribes for visas or permits when travelling to these destinations.…”

“…Following the methodology suggested by Saha and Gounder () and Yap and Saha (), we begin our analysis by focusing on the conventional linear functional form. The linear base model is presented as follows: where TD is tourism demand, i is country, t is time, RGDPPC is real gross domestic product per capita, IEXC is the initial exchange rate (based on exchange rates in the year 1999), CEXC is changes in exchange rates, ATT is tourist attractions, H is a dummy variable for countries that have historical heritage approved by United Nations Educational, Scientific and Cultural Organization (UNESCO), N is a dummy variable for countries that have natural heritage approved by UNESCO and ε is the error term.…”

“…Recent studies by Lau and Hazari () and Das and Dirienzo () highlight that perceived corruption is negatively correlated with tourism demand; hence, less corrupt countries receive a higher volume of tourism demand. In contrast, Yap and Saha () show that an increase in the corruption index would not have an adverse influence on tourist arrival (TA) numbers, particularly for those countries that have historical and natural heritage. Hence, the existing literature provides some inconclusive results regarding the debate on the relationship between tourism and corruption.…”

What about relative corruption? The impact of the relative corruption on the inbound tourism to Turkey

“…In other words, low levels of corruption can be beneficial for the tourism industry. Using 139 countries for the period from 1999 to 2009, Yap and Saha () find that corruption might not be so harmful, if a destination has a historical and natural heritage. Recently, Lv and Xu () observe the significant nonlinear relationship between corruption and tourism demand in 62 countries over the period 1998–2011, but the relationship is significant at the 50th and 75th quantiles.…”

Special issue on tourism and instability

“…When violence becomes widespread and prolonged, governments in tourist origin countries will advise against travelling to those destinations and commercial operators will cancel tours because of insufficient bookings and for fear of liability suits, and will promote other destinations instead (Neumayer, 2004). A further problem is that terrorist attacks and political disruption can damage infrastructure relevant to the tourism industry (Llorca-Vivero, 2008) and may damage or destroy national treasures (Yap & Saha, 2013).…”