Relationship Between Foreign Trade and Tourism: An Empirical Study on Mediterranean Countries

Abstract

In the present study, relationships between tourism and foreign trade in France, Greece, Italy, Spain, and Turkey were investigated by using new generation panel data analysis methods for the 1995-2015 period. The presence of cross-section dependency was tested by LM, LMS, CD, and LMBC tests and cross-section dependency was determined. The stationarity of the series was examined by CADF and it was found that the series were I(1). The existence of co-integration relationship between the series in the models was investigated by Durbin-H test, and it was found that the series were co-integrated. Co-integration coefficients were estimated by the CCE method and when the number of tourists who visit the country increased by 1%, Turkish exports increased by 0.25%. In France, imports increased by 0.18% on average, when the number of tourists going abroad rose by 1%. Exports increased by 0.43% in France, 0.63% in Greece, 0.60% in Spain, and 0.93% in Turkey when exports increased by 1%. It was determined that the increase in imports increased the number of tourists going abroad in France and Spain, and decreased the same figure in Greece. In the causality test, no strong causal relationship between foreign trade and tourism was determined.