Effect of real exchange rate and income on international tourist arrivals for Turkey

Tourism has been one of the fastest growing sectors in the world economy for decades. It has been the third biggest export item in the world economy. According to World Tourism Organization (UNWTO), total 1.34 billion tourist arrivals has recorded in destinations around the world and total international tourism receipts has reached %10 of World GDP in 2017. By 2030, total number of international tourist arrivals is expected to be 1,8 billion. Beyond its effect on country’s brand value and image, tourism has significant contribution on every host country’s economy. Particularly, international tourism receipts stand as an important foreign exchange resource for Turkey as a country which constantly suffers from current account deficit. In this perspective, this paper tries to estimate the effects of visiting countries GDP and real exchange rates of host countries on tourist arrivals from about 65 different countries for Turkey. To achieve this aim, panel co-integration analysis under cross sectional dependence with common correlated effects (CCE) method has employed over the period 2002Q1-2017Q4. Preliminary results of our study implies both the real exchange rate and the GDP are effective on the international tourist arrivals for Turkey. However, the degree of effect differs across the examined countries