Exports and Tourism Demand: Evidence of a Strong Link Disrupted by Pandemic Restrictions

This study empirically examines the relationship between inbound tourism demand and foreign trade for Türkiye by employing panel data analysis to estimate a tourism demand function that incorporates an export variable alongside conventional determinants. The results reveal that a 10% increase in exports corresponds to a 2.11% rise in tourist arrivals. This positive linkage is attributed to strengthened interpersonal networks, enhanced transportation infrastructure, and greater destination visibility fostered by trade relations. However, this link does not follow a linear pathway. While exports robustly impact tourism under normal conditions, the influence vanishes during crises with mobility restrictions. COVID-19 restrictions caused a structural break for the tourism-trade nexus of Türkiye. The insignificant export-pandemic interaction term employed in the econometric model proves that trade loses its stimulating effect on tourism during international mobility crises. Key findings also highlight that GDP and population size of source countries are the primary determinants of Türkiye’s tourism demand, and exports exert a larger effect than relative prices. Results suggest that policymakers should adopt alternative strategies independent from international mobility conditions to sustain the tourism sector in such shocks, and export promotion may be more effective than price competitiveness strategies in stimulating demand.