cointegration Introduction 1.1. Background to the study Tourism

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cointegration Introduction 1.1. Background to the study Tourism

cointegration

                                                                 Introduction                      

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1.1.           
Background to the study

Tourism
essentially entails the movement of people (called tourists or visitors), from
their routine places of work and residence to another (called a tourist
destination), for the purposes of business, leisure and personal motives. The
activities they participate in during their stay in the destination, the type
of facilities and available services to provide for their needs, and for which
the length of stay in the destination does not go beyond one year (UNWTO, 2014).

Tourism’s
contribution in the cultural, economic and social wellbeing of a nation was
formally articulated during the Manila Statement in October 1980, where tourism
was recognized as a tool that can help eliminate the widening economic
disparities between industrialised and developing states (UNWTO, 1980).
For many economies in both the industrialised and developing nations, tourism is
a powerful tool for strong economic performance, creating jobs and bringing
about significant economic growth (WTTC, 2017).

Matias, et al (2016) states that tourism produces a substantial
amount of revenue, through income spent by visitors in the demand for tourists’
facilities and services such as accommodation, food and drink, transportation,
tours, entertainment services, excursions, air tickets, currency exchange, and
a host of other assorted services. About twenty economies, mostly island
countries, rely
on tourism as the most prominent source of revenue. Seychelles and Maldives,
are examples of the nations that strongly depend on tourism for economic
expansion (Lizzie, 2016).

A
publication from the World Bank Group by Christie, et al (2014) showed that African countries are
endowed with important tourism potential which if well harnessed and managed,
would substantially add to the innovation and dramatic transformation of their
economies. Tourism can contribute to significant economic growth, by prompting
the provision of infrastructure, the creation of employment, increase domestic
spending, stimulating tourism-related investment, fueling the endorsement of
national heritage, and raising environmental preservation.

Tourism
is now considered to be a key pillar in the strategic framework for sustainable
and inclusive growth in Africa. It can produce significant positive spillovers
and positive externalities, which can energise the economy and foster growth (UNCTAD, 2016).

According to the World Economic Forum (2015), tourism contributes to
approximately 9% of Africa’s domestic product, while the sector has been
forecasted to grow by almost 5% in the next few years. Additionally, the Office of the Special Adviser on Africa
(2016) reported that the
African tourism sector is expanding gradually. The continent now claims
approximately 5% of the number of global visitors and 3% of all tourism receipts.
In 2014, the travel and tourism GDP for Africa was up to $83 billion. The
tourism sector employs approximately nine million people, causing it to be one
of the most prominent sectors for employment in the African continent. 

During
the last 10 years, there had been a gradual increase to the total number of
visitors to Cameroon. In year 2006, tourists in Cameroon amounted to 451.000, and
in 2014 amounted to 822.000 (World
Bank, 2017). This shows that the number of tourist

World
Travel and Tourism Council (WTTC) tourism report for Cameroon, from 2007 to
2016, shows a progressive increase in tourism’s share of Cameroon’s GDP. Thus,
this suggests a correlation between increase in the proportion of Cameroon’s
GDP produced by tourism and number of tourists.

The WTTC 2017 report on ‘the
Economic impact of travel and tourism in Cameroon, indicated that in 2017, the
direct contribution of visitor exports amounted to 12.4 percent of total
exports in 2016 and it is suspected to rise by 3.7 % and increase by 5.2 %
yearly from 2017-2027. Tourism and Tourism Investment in 2016 was 3.9 percent
of the total investment and expected to rise by 3.8 % in 2017. Also, 3.8 %
yearly for the next 10years for a total of 2.2 % (WTTC, 2017).

1.2  Problem statement

As per the
standards of the United Nations World Tourism Organisation (UNWTO), there is a direct
relationship between income spent by tourists, and the proportion of tourism’s
contribution to a country’s GDP.

During the
last ten years, Cameroon has experienced a progressive increase in the number
of tourists (world bank,
2017). There had also being a noticeable increase in the proportion of
Cameroon’s GDP generated by tourists, alongside this increase in the number of
tourists to the country. Though there appears to be a positive correlation between
the number of tourists and GDP,
very little studies have been conducted to establish the exact nature of this
relationship. Also, previous literature on tourism in Cameroon made little or
no effort to find out whether tourism has a long-run relationship with GDP.
This is important because understanding the exact nature of the relationship
between tourism and GDP is vital as it enables a country to fine-tune its
tourism development and marketing strategies, in a way that is carefully
adapted to meet tourism and economic objectives of the nation. For example,
based on its revenue objectives, a government can decide whether to attract
many low-spending tourists, or a small number of high-spending tourists. It is
therefore the intention of this research to empirically investigate the impact
of tourism on the GDP of Cameroon, while controlling for other variables.

1.3 
Research
objectives

The objectives of this research work
are:

·        
To
investigate whether tourism has a significant impact on the real GDP of
Cameroon.

·        
To
examine whether there is any long-run relationship between tourism and real GDP
of Cameroon.

This paper is further organized as
follows: section two provides literature review on the impacts of tourism on
GDP. Section three deals with the methodology employed to model tourism impact
in Cameroon. Section four follows with Data analysis and results discussion,
while section five gives summary and conclusion.

 

 

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