Terrorism or Political Terrorism Vs Tourism: New Evidence from Developing Countries

Abstract

In the 21st century, tourism emerges as a significant income generating sector as well as weapon for growth and survival for various countries[1]. Tourism is the largest global industry with continuously growing global market which will triple in size by 2020[2]. Besides, numerous natural and human-caused disasters, the threat that accompanies political turmoil, tends to frighten potential tourists more severely. Such uncertainties in an economy can impede the flow of tourism. Terrorism risk tends to intimidate the traveling public more severely—as demonstrated by the realignment of travel flows and cancellation of vacations during periods of heightened terrorist activity. The tourism industry is highly vulnerable to such disturbances—whether social or political (i.e., riots, insurgency, terrorism, crime, political upheaval, war, regional tensions). This study also aims at finding a nexus between Terrorism and tourism based on new evidence from developing nations. Moreover developing nations have been further divided into two panels i.e. Politically Free , and Politically Not Free nations. This classification has been made to see whether political environment also affects terrorism activities in nations or not. Similarly another important aspect of this study is to see whether simply terrorist’s activities or Political terrorism[3] is a hurdle for the development of an economy. For this purpose different variables related to political terror and failures have also been used. Moreover time span for the study is from 1995-2011. Both parametric and non-parametric approaches have been employed. For evaluating the impact of Terrorist activities, data has been taken from World Governance Indicators(WGI), while data for tourism is from World Tourism Organization (UNWTO).

Keywords: Tourism, Economic Development, panel Data

[1] E. T. Heath, “Globalization of the Tourism Industry: Future Trends and Challenges for South Africa,” South African Journal of Economic and

Management Sciences, vol. 4, pp. 542-569, 2001.

[2] World Tourism Organization, World Tourism Barometer.

[3] E. Neumayer, “The impact of political violence on tourism: Dynamic cross-national estimation,” Journal of Conflict Resolution vol. 48(2), pp.

259-281, 2004