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Tourism Economics in Sri Lanka: An Econometric Analysis

Author

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  • Prasanna-Perera Lalith Welgamage

    (Senior Lecturer in Economics & Statistics, Department of Economics and Statistics, University of Peradeniya, Sri Lanka,)

Abstract

Sri Lanka aims to transform its tourism sector into one of the largest foreign exchange earners in 2016 by attracting 2.5 million high spending tourists. Tourism was ranked as the fifth largest source of foreign exchange earnings in 2012, and third largest in 2013 contributing 5.2 percent to total foreign earnings of the country. Further to this, the Sri Lankan government also identified tourism as a major hub of the country’s economy. Given the multi-dimensional impact the sector has on the country’s economy, it has to be examined systematically. This paper develops an econometric model based on the Cobb-Douglas function to analyze the relation between foreign exchange earnings, tourist arrivals, tourist prices, and tourist spending and direct employment in tourism. These variables of tourism are estimated utilizing model parameters such as R-Studio based on data from the sample period from 2002 to 2013. The formula presented in this study can be used by policy makers to calculate future foreign exchange earnings, employment, arrivals and prices related to tourism in Sri Lanka.

Suggested Citation

  • Prasanna-Perera Lalith Welgamage, 2015. "Tourism Economics in Sri Lanka: An Econometric Analysis," International Journal of Business and Social Research, LAR Center Press, vol. 5(1), pages 90-101, January.
    • Handle: RePEc:lrc:larijb:v:5:y:2015:i:1:p:90-101
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    File URL: http://thejournalofbusiness.org/index.php/site/article/view/684/495
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    References listed on IDEAS

    as
    1. Jacint Balaguer & Manuel Cantavella-Jorda, 2002. "Tourism as a long-run economic growth factor: the Spanish case," Applied Economics, Taylor & Francis Journals, vol. 34(7), pages 877-884.
    2. Golam Rasul & Prem Manandhar, 2009. "Prospects and Problems in Promoting Tourism in South Asia," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 10(1), pages 187-207, January.
    3. E. Çaglayan & N. Sak & K. Karymshakov, 2012. "Relationship between Tourism and Economic Growth: A Panel Granger Causality Approach," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(5), pages 591-602, September.
    4. repec:asi:aeafrj:2012:p:518-529 is not listed on IDEAS
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    Cited by:

    1. Nyoni, Thabani, 2019. "Sri Lanka – the wonder of Asia: analyzing monthly tourist arrivals in the post-war era," MPRA Paper 96790, University Library of Munich, Germany.

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    More about this item

    Keywords

    Employment; foreign exchange; R-Studio; Sri Lanka; tourism industry.;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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