Determinants of tourism in Indian states: an empirical analysis
Abstract
Purpose
The purpose of this study is to empirically examine the determinants of foreign and domestic tourist arrivals and revenue receipts from tourism using state-level panel data in 25 Indian states for the period 1995 to 2011.
Design/methodology/approach
The study uses IV-2SLS method to examine the determinants of foreign and domestic tourist arrivals in Indian states. Economic development (proxied by per capita income, PCI) is an endogenous variable. We have used the state-wise “liable to flood prone area” as an instrument for PCI to control for endogeneity. An inverse relationship exists between state-wise “liable to flood prone area” and real PCI, in a sense that states with greater proportion of area marked as liable to flood experience lower economic development. For robust analysis, the study has also used IV-Tobit model to examine the effects of economic development and crime on revenue receipts from tourism.
Findings
The empirical results based on IV-2SLS method suggest that, in addition to economic development, other factors such as the presence of world-class monuments, natural landscapes and cultural heritage also encourage both international and domestic visitors in Indian states. While crime activities adversely affect the inflow of foreign and domestic tourist arrivals, terror activities do not significantly impact tourist arrivals and tourism receipts. Finally, the estimates of IV-Tobit model show that economic development and government expenditure on tourism sector leads to a significant increase in tourism receipts.
Originality/value
To the best of our knowledge, this is the first study done in Indian context in which state-level panel data have been used to examine the impact of economic, social and cultural factors on tourist arrivals and revenue earnings from tourism. Hence, the present study not only contributes to existing tourism literature, but also makes an important contribution to structuring suitable tourism management policies for the Indian states.
Keywords
Acknowledgements
The authors would like to thank Prof B. N. Goldar and two anonymous reviewers for giving their valuable suggestions and comments. Special thanks are also due for Shailesh Kumar, Deputy Director, Ministry of Tourism, Government of India, for facilitating the process of data collection. Any remaining errors are of authors.
Citation
Parida, Y., Bhardwaj, P. and Roy Chowdhury, J. (2017), "Determinants of tourism in Indian states: an empirical analysis", Tourism Review, Vol. 72 No. 3, pp. 330-343. https://doi.org/10.1108/TR-11-2016-0047
Publisher
:Emerald Publishing Limited
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