Tourism and trade in OECD countries: a dynamic heterogeneous panel data analysis

Abstract

This article studies the empirical link between international tourism and trade. We apply dynamic heterogeneous panel data techniques to analyse both long and short-run relationship for the case study of OECD countries. This link is studied by estimating the cointegration vector and analysing the short causality between variables. The analysis recognises that inbound tourism can promote international trade and also that international flow of goods requires and may encourage tourist arrivals and departures. The statistical significance of this link supports the presence of business opportunities due to the potential complementary relationship between tourism and trade. The results suggest a short-run nexus between tourism and trade, and that these variables are cointegrated.