Determinants of Tourism Demand in Selected EU Med Countries: Empirical Panel Analysis

Abstract

Due to its significant contribution to the prosperity and growth of economies, the tourism industry has always been the one that attracted the attention of many practitioners and researchers who have tried in different ways and from different aspects to identify the key variables that determine tourism demand. The importance of tourism is especially evident in the group of countries included in the EUrope Mediterranean (EU Med) alliance. Considering the importance and role of tourism, the main objective of this research is to examine the influence of different factors on tourism demand for selected eight countries from EU Med alliance during the period 2010-2020 with the application of a dynamic panel data model. The variables encompassed in the model, i.e., income and trade, show a statistically significant positive influence on tourist arrivals in eight countries from EU Med alliance. The results of the empirical research confirmed the positive impact of previous demand on current demand as well as its statistical significance. On the other hand, we also found that terrorism and Covid-19 negatively impact tourist demand. These results imply that for any country in the eight countries from EU Med alliance to attract more arrivals of tourists, it should invest significantly in the tourism sector in terms of upgrading tourism infrastructure, increasing trade openness and promoting a peaceful reputation and safe country.