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A gravity model of foreign direct investment in the hospitality industry

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  • Falk, Martin

Abstract

This paper investigates the determinants of FDI activity in the hospitality industry using a gravity model. It draws on a new and unique database of 2420 FDI projects carried out by 50 parent countries in 104 host countries from 2005 to 2011. Results show that the number of hotel FDI projects is significantly and positively related to the market size and the existence of a common language while increases in the level of business regulations, tax rates or minimum wages have the opposite effect. Geographical distance and socioeconomic factors are not relevant. Comparing the number of predicted FDI projects with those actually carried out, we find that the United Kingdom, India, and Mexico are particularly successful in attracting hotel FDI projects, whereas Russia, Germany, and the United States host much fewer.

Suggested Citation

  • Falk, Martin, 2016. "A gravity model of foreign direct investment in the hospitality industry," Tourism Management, Elsevier, vol. 55(C), pages 225-237.
    • Handle: RePEc:eee:touman:v:55:y:2016:i:c:p:225-237
    DOI: 10.1016/j.tourman.2016.02.012
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    4. Andre Jungmittag & Robert Marschinski, 2023. "Service trade restrictiveness and foreign direct investment—Evidence from greenfield FDI in business services," The World Economy, Wiley Blackwell, vol. 46(6), pages 1711-1758, June.
    5. Pick-Soon Ling & Ming K. Lim & Ming-Lang Tseng, 2020. "Assessing Sustainable Foreign Direct Investment Performance in Malaysia: A Comparison on Policy Makers and Investor Perceptions," Sustainability, MDPI, vol. 12(20), pages 1-38, October.
    6. Sylvain Petit & Neelu Seetaram, 2019. "Measuring The Effect Of Revealed Cultural Preferences On Measuring The Effect Of Revealed Cultural Preferences On Tourism Exports," Post-Print hal-01924443, HAL.
    7. Shicheng Li & Jian Gong & Qinghai Deng & Tianyu Zhou, 2018. "Impacts of the Qinghai–Tibet Railway on Accessibility and Economic Linkage of the Third Pole," Sustainability, MDPI, vol. 10(11), pages 1-17, October.
    8. Tafadzwa Matiza & Sandra Perks, 2022. "The tourism – Foreign direct investment nexus: Empirical evidence from Zimbabwe (2009–2015)," Tourism Economics, , vol. 28(4), pages 1059-1079, June.
    9. Joey Pek U Sou & Thea Vinnicombe, 2023. "Does governance quality matter for FDI-led tourism development? A supply-side perspective," Tourism Economics, , vol. 29(2), pages 392-408, March.
    10. Mehmet Altin & Esra Memili & Sevil Sönmez, 2017. "Institutional economics and firm creation in the hospitality and tourism industry," Tourism Economics, , vol. 23(7), pages 1381-1397, November.
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    13. Chung-Khain Wye & Elya Nabila Abdul Bahri, 2021. "How does employment respond to minimum wage adjustment in China?," The Economic and Labour Relations Review, , vol. 32(1), pages 90-114, March.

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