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The (Un)sticky role of exchange and inflation rate in tourism development: insight from the low and high political risk destinations

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  • Seyed Alireza Athari
  • Uju Violet Alola
  • Matina Ghasemi
  • Adewale Andrew Alola

Abstract

Although the tourism industry has continued to exert a significant impact on economies of most destinations, the impacts of political (in) security, socioeconomic and financial dynamics in the destination countries are equally playing decisive roles. Mirroring from this perspective, this study examined the role of political risk, exchange rate and inflation rate on the inbound international tourists in the panel of 76 destinations over the period 1995–2017. By employing the Pooled OLS (Ordinary Least Square) and the Generalized Moment of Methods (GMM), the estimation results suggest that the political risk is a significant impediment to the growth of total tourism arrivals in the panel countries. In addition, high exchange and inflation rates, respectively, impact international tourism arrivals (ITAs) in a positive and negative pattern. Moreover, the findings show that the impact of political risk on ITAs is significant, and has a positive and negative effect in the low- and high-risk destinations, respectively. While the study urges for a formidable drive towards sustainable conflict resolution in destination countries, it further presents recommendations for preventing potential spillover effects in the event of the political, economic or financial crisis.

Suggested Citation

  • Seyed Alireza Athari & Uju Violet Alola & Matina Ghasemi & Adewale Andrew Alola, 2021. "The (Un)sticky role of exchange and inflation rate in tourism development: insight from the low and high political risk destinations," Current Issues in Tourism, Taylor & Francis Journals, vol. 24(12), pages 1670-1685, June.
    • Handle: RePEc:taf:rcitxx:v:24:y:2021:i:12:p:1670-1685
    DOI: 10.1080/13683500.2020.1798893
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    Cited by:

    1. Uju Violet Alola & Darya Baeva & Andrew Adewale Alola, 2023. "Determining the (A)symmetric Role of Business–Consumer Confidence in Outward–Inward Tourism in Russia: A Competitiveness Perspective," International Journal of Global Business and Competitiveness, Springer, vol. 18(1), pages 22-34, June.
    2. Toyo A. M. Dossou & Simplice A. Asongu & Emmanuelle N. Kambaye & Kouessi P. Dossou & Alastaire S. Alinsato, 2023. "Governance, tourism and inclusive growth in Africa," Working Papers of the African Governance and Development Institute. 23/066, African Governance and Development Institute..
    3. Mohammad Nematpour & Masood Khodadadi & Sarasadat Makian & Mohammad Ghaffari, 2023. "Future scenarios for improving Iran's overall destination image and attractiveness: A supply‐side perspective," Futures & Foresight Science, John Wiley & Sons, vol. 5(1), March.
    4. Chen, Liang & Guo, Yirong, 2023. "Revisiting resources extraction perspective in determining the tourism industry: Globalisation and human capital for next-11 economies," Resources Policy, Elsevier, vol. 85(PA).
    5. Muhammad Amin Hasan & Mr. Abdullah & Muhammad Arsalan Hashmi & Ali Sajid, 2022. "International Remittances and International Tourism Development in South Asia: The Moderating Role of Political Stability," Journal of Economic Impact, Science Impact Publishers, vol. 4(3), pages 177-187.

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