Intra-tourism trade, income distribution and tourism endowment: an econometric investigation

Abstract

Empirical investigation (Nowak et al., 2012) points out that vertical intraindustry trade (VIIT) in Europe is the dominant type of intra-industry trade (IIT) in the tourism sector. This article is the first in tourism literature to test separately the determinants of vertically and horizontally differentiated services, using the most recent models in the theory of IIT. We examine bilateral trade among all trading partners of the sample of European countries, covering the period 2000 to 2008. We show that differences in Gross Domestic Product (GDP) per capita and the incomedistribution overlap, as well as cultural proximity, are the most significant driving forces behind VIIT for European countries. Geographic distance has a negative effect, whereas specific tourism endowments and relative size of the economies are less conclusive. These results confirm theory predictions and most of the empirical findings related to the pattern of VIIT for the manufacturing sector. As expected, we find that determinants of VIIT cannot explain horizontal intra-industry trade (HIIT) in tourism. We suggest two alternative methods of estimation: Generalized Least Squares (GLS) logistic function and the fractional logit estimator. We conclude that there are common factors explaining IIT in the manufacturing and tourism trades.

Measuring the Effect of Revealed Cultural Preferences on Tourism Exports

“…To improve the estimation further, the paper uses bilateral tourism expenditures data as the dependent variable unlike the majority of the models that use data on arrivals or departures. Hanna et al (2015) state that the size and the nature of the tourism flows have to be analysed at the bilateral level and using expenditures data because tourists' expenses reflect the preferences for the tourism product better than data on arrivals. The structure of this paper proceeds as follows: the related literature is surveyed in Section 2.…”

“…He finds that the USA is more attractive for tourists who come from countries with a large share of Christians, and more precisely with a large share of Protestants. A similar variable is used by Hanna, Lévi, and Petit (2015) to explain the intra-tourism trade in EU. There is a growing body of literature that analyzes the effect of immigration on tourism, claiming that the existence of a community of immigrants from the home country at the destination is likely to increase the cultural proximity and preferences between the home and host countries.…”

“…The advantage of using a balanced panel dataset is the guarantee that it will be not over-estimate or under-estimate marginal effects due to the under or over-representation of at least one country or year in the sample.International tourism flows can be captured either through volume (i.e., arrivals/departures) or through value (receipts/expenditures). Monetary data are employed to be consistent with the cultural variable and becauseHanna et al (2015) state that tourism receipts are a better approximation of the preferences of tourists, and this is supported by the UNWTO. The tourism receipts/expenditures are in millions of US dollars and are compiled from the OECD database(2010, 2014).…”

Tourism, insularity, and remoteness: A gravity-based approach

“…In addition, it should be noticed that international trade in tourism services is characterized by intra-industry trade flows, which are typical in an industry characterized by product differentiation (natural and historical sites, sociocultural differences between countries) and by a structure of monopolistic competition on the supply side (Hanna et al, 2015; Nowak et al, 2012). Tourism in small islands is indeed the result of natural endowments, in accordance with Heckscher–Ohlin model of trade, and of two-way flows related to the Dixit–Stiglitz–Krugman theory of trade.…”

A reconsideration of tourism specialization in Europe

“…Second, tourism is always considered as a homogeneous product. Yet available evidence suggests that tourism is a highly differentiated product, in particular regarding the dimension of quality (Hanna, Lévi & Petit, 2015). This could have serious implications on the way tourism influences economy.…”