Travel Channel Meets Discovery Channel or How Tourism Can Encourage Better Export Performance and Diversification in Nepal

Abstract

Entering and surviving in export markets is a costly process that involves learning about the existence of foreign demand, 'discovering' production costs, building up reputation, succeeding in product branding to reduce competitive pressures and to upgrade quality to serve demanding international clients, and remaining competitive in the marketplace. This article argues that tourism alleviates some of these costs by providing an inexpensive platform for cost discovery and by acting as an accessible 'in-house' trade fair for domestic producers. It combines product-level data on world and Nepal's exports with Nepalese data on tourist inflows, and macro-indicators on relative prices. For tourism-related goods, it reveals a positive association between tourist inflows from given destinations with future merchandise exports to those destinations, while no association is found for goods unrelated to tourism. The results suggest spillovers from tourism into merchandise export performance and diversification and gains from cooperation between tourism and export promotion. JEL: F14, L83, F63

The Role of Tourism in Promoting Export Performance in Indonesia: Gravity Model Approach

“…The number of tourist visits in models 1, 2, 3 and 5 has a positive and significant effect on the demand for exports of food and beverages (primary) and food and beverages (processed), industrial supplies, and consumer goods to the country of origin of tourists one year later. These results are in line with several studies (Reis and Varela, 2015;Madaleno et al, 2016;El-Sahli, 2017) The estimation results in model 1 show that an increase in the number of tourist visits will increase the demand for exports of food and beverages (primary) to the country of origin of tourists one year afterward. According to the Ministry of Trade (2017), Indonesia has a comparative advantage in the food and beverages sector, especially agricultural products.…”

“…Model 5 also shows a positive relationship between the number of tourist visits and export demand one year after. This result is in line with El-Sahli (2017) and Reis and Varela (2015) where an increase in tourism demand will increase exports of non-food consumption goods, especially local or traditional goods.…”

“…The relationship between tourism and international trade without using the gravity model was also carried out by Reis and Varela (2015) and Madaleno et al (2016). Reis and Varela (2016) emphasized the importance of promotional/network effects in the tourism sector that can boost a country's export performance.…”

“…The higher the level of corruption, the lower the demand for tourism in a country. Several empirical researchers use the number of foreign tourist visits to analyze a country's tourism demand (Reis and Varela, 2015;Santana-Gallego et al, 2016;El-Sahli, 2017).…”

“…Based on empirical studies in various countries, the development of the tourism sector has a relationship with international trade (Santana-Gallego et al, 2016; Reis and Varela, 2015;Madaleno et al;El-Sahli, 2017;Petit and Seetaram, 2018). Increasing the number of foreign tourist visits has been proven to reduce the cost of international trade (Santana-Gallego et al, 2016).…”