Factors Impacting Tourism Demand: An Analysis of 10 ASEAN Countries

Abstract

This study investigates the effect of infrastructure, economic sectors and its status, foreign direct investment and private investment, as well as the role of political stability in enhancing the tourism demand in the ASEAN region. The research collected the secondary data from the World Bank database and the UNWTO website of 10 ASEAN countries over 17 years from 2000 to 2016. Applying the generalized method of moments, this research found that, “private investment”, “economic sectors”, “exchange rate and infrastructure measured by “using of the internet” can increase the tourism demand of a country in the ASEAN region. This research provided evidence indicating that the “foreign direct investment” and “inflation” are two detrimental factors for tourist attraction. The major finding confirmed the positive role of “political stability” in increasing tourist arrivals. First, attracting tourists to a country always poses many challenges to its government. It has been observed in the past decades that though there were many documents, which confirmed that industry can help in promoting tourism, very few studies investigated the role of both agriculture and manufacturing sectors in tourism promotion. Secondly, there are only a few studies which verifies the stability of the political system to the tourism demand in the ASEAN region and that this variable (political stability) has the strongest impact.